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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-19281
THE AES CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 54-1163725
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1001 NORTH 19TH STREET, ARLINGTON, VIRGINIA 22209
(Address of Principal Executive Offices) (Zip Code)
(703) 522-1315
(Registrant's Telephone Number, Including Area Code)
----------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of Registrant's Common Stock, par value
$0.01 per share, at July 31, 1998, was 175,886,504.
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<PAGE>
THE AES CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Operations 1
Consolidated Balance Sheets 2
Consolidated Statements of Cash Flow 4
Notes to Consolidated Financial Statements 5
Item 2. Discussion and Analysis of Financial Condition and Results of
Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 18
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE AES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1997 AND 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(UNAUDITED) THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
6/30/97 6/30/98 6/30/97 6/30/98
- -----------------------------------------------------------------------------------------------------------------------
(in millions, except per share amount)
<S> <C> <C> <C> <C>
REVENUES:
Sales and services $ 261 $ 565 $ 522 $ 1,140
OPERATING COSTS AND EXPENSES:
Cost of sales and services 163 385 330 782
Selling, general and administrative expenses 6 12 15 27
Provision to reduce contract receivables 3 - 10 15
------------ ------------ ------------ ------------
TOTAL OPERATING COSTS AND EXPENSES 172 397 355 824
------------ ------------ ------------ ------------
OPERATING INCOME 89 168 167 316
OTHER INCOME AND (EXPENSE):
Interest expense (48) (99) (92) (202)
Interest income 10 17 18 31
Equity in earnings (before income tax) 17 43 37 100
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 68 129 130 245
AND MINORITY INTEREST
Income taxes 22 36 42 69
Minority interest 4 22 6 40
------------ ------------ ------------ ------------
NET INCOME $ 42 $ 71 $ 82 $ 136
============ ============ ============ ============
BASIC EARNINGS PER SHARE: $ 0.26 $ 0.41 $ 0.51 $ 0.77
============ ============ ============ ============
DILUTED EARNINGS PER SHARE: $ 0.25 $ 0.39 $ 0.50 $ 0.75
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE>
THE AES CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,1997 AND JUNE 30,1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
(UNAUDITED)
12/31/97 6/30/98
- -----------------------------------------------------------------------------------------------------------------
($ in millions)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 302 $ 367
Short-term investments 127 80
Accounts receivable, less provision to reduce contract
receivables (1997-$37 and 1998-$52) 323 380
Inventory 95 121
Asset held for sale 139 -
Receivable from affiliates 23 21
Deferred income taxes 47 40
Prepaid expenses and other current assets 134 165
------------- -------------
Total current assets 1,190 1,174
PROPERTY, PLANT AND EQUIPMENT:
Land 29 31
Electric generation and distribution assets 3,809 5,334
Accumulated depreciation and amortization (373) (445)
Construction in progress 684 642
------------- -------------
Property, plant and equipment, net 4,149 5,562
OTHER ASSETS:
Deferred financing costs, net 122 148
Project development costs 87 96
Investments in and advances to affiliates 1,863 2,052
Debt service reserves and other deposits 236 185
Electricity sales concessions and contracts 1,179 1,133
Goodwill 23 26
Other assets 60 88
------------- -------------
Total other assets 3,570 3,728
------------- -------------
TOTAL $ 8,909 $ 10,464
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
THE AES CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND JUNE 30,1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
(Unaudited)
12/31/97 6/30/98
- ------------------------------------------------------------------------------------------------------------------
($ in millions)
<S> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 205 $ 207
Accrued interest 68 114
Accrued and other liabilities 335 342
Other notes payable - current portion - 174
Project financing debt - current portion 596 599
------------- -------------
Total current liabilities 1,204 1,436
LONG-TERM LIABILITIES:
Project Financing Debt 3,489 4,560
Revolving bank loan 27 225
Other notes payable 1,069 1,069
Deferred income taxes 273 302
Other long-term liabilities 291 144
------------- -------------
Total long-term liabilities 5,149 6,300
MINORITY INTEREST 525 646
COMPANY-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUSTS HOLDING
SOLELY JUNIOR SUBORDINATED DEBENTURES OF AES 550 550
STOCKHOLDERS' EQUITY:
Common stock 2 2
Additional paid-in capital 1,030 1,040
Retained earnings 581 717
Cumulative foreign currency translation adjustment (131) (226)
Less treasury stock at cost (1) (1)
------------- -------------
Total stockholders' equity 1,481 1,532
------------- -------------
TOTAL $ 8,909 $ 10,464
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
THE AES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30, 1997 AND 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
(Unaudited) SIX SIX
MONTHS MONTHS
ENDED ENDED
6/30/97 6/30/98
- ----------------------------------------------------------------------------------------------------------------
($ in millions)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 82 $ 136
Adjustments to net income:
Depreciation and amortization 34 75
Provision for deferred taxes 12 35
Undistributed earnings of affiliates (12) (52)
Other (1) 47
Change in working capital (20) (43)
------------ ------------
Net cash provided by operating activities 95 198
INVESTING ACTIVITIES:
Property additions (206) (142)
Acquisitions, net of cash acquired (1,066) (1,356)
Proceeds from the sales of assets - 254
Sale of short-term investments 1 47
Affiliate advances and equity investments (643) (181)
Project development costs (13) (9)
Debt service reserves and other assets (17) 56
------------ ------------
Net cash used in investing activities (1,944) (1,331)
FINANCING ACTIVITIES:
Borrowings under the revolver 19 372
Issuance of project financing debt and other coupon bearing securities 1,611 1,449
Repayments of project financing debt and other coupon bearing securities (50) (458)
Payments for deferred financing costs - (10)
Other liabilities - (147)
Minority interest payments 258 (18)
Sales of common stock 149 10
------------ ------------
Net cash provided by financing activities 1,987 1,198
Increase in cash and cash equivalents 138 65
Cash and cash equivalents, beginning 185 302
------------ ------------
Cash and cash equivalents, ending $ 323 $ 367
SUPPLEMENTAL INTEREST AND INCOME TAXES DISCLOSURES:
Cash payments for interest $ 70 $ 156
Cash payments for income taxes 22 37
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
THE AES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts of The AES
Corporation, its subsidiaries and controlled affiliates (the "Company" or
"AES"). Intercompany transactions and balances have been eliminated. Investments
in 50% or less owned affiliates over which the Company has the ability to
exercise significant influence, but not control, are accounted for using the
equity method.
In the Company's opinion, all adjustments necessary for a fair presentation
of the unaudited results of operations for the three and six months ended June
30, 1997 and 1998, respectively, are included. All such adjustments are accruals
of a normal and recurring nature. The results of operations for the period ended
June 30, 1998 are not necessarily indicative of the results of operations to be
expected for the full year. The financial statements are unaudited and should be
read in conjunction with the financial statements in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
2. Net Income Per Share
Basic and diluted net income per share computations are based on the
weighted average number of shares of common stock and potential common stock
outstanding during the period, after giving effect to stock splits. Potential
common stock, for purposes of determining diluted earnings per share, includes
the dilutive effects of stock options, warrants, deferred compensation
arrangements and convertible securities.
The effect of such potential common stock is computed using the treasury
stock method and the if-converted method, in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. Comparative
earnings per share data have been restated for prior periods. The number of
shares used in computing basic earnings per share were 163.4 million and 175.6
million for the quarters ended June 30, 1997 and 1998, respectively, and 159.5
million and 175.4 million for the six months ended June 30, 1997 and 1998,
respectively. The number of shares used in computing diluted earnings per share
were 168.0 million and 187.5 million for the quarters ended June 30, 1997 and
1998, respectively, and 164.0 million and 187.2 million for the six months ended
June 30, 1997 and 1998, respectively.
5
<PAGE>
3. Inventory
Inventory, valued at the lower of cost (principally first-in, first-out
method) or market, consists of coal, raw materials, spare parts, and supplies.
Inventory at December 31, 1997 and June 30, 1998 consisted of the following (in
millions):
<TABLE>
<CAPTION>
12/31/97 6/30/98
---------- ---------
<S> <C> <C>
Coal, oil and other raw materials $ 58 $ 55
Spare parts, materials and supplies 37 66
---------- ---------
Total $ 95 $ 121
========== =========
</TABLE>
4. Investments in and Advances to Affiliates
The following table presents summarized financial information (in millions)
for equity method affiliates on a combined 100% basis. Amounts presented include
the condensed income statement information of NIGEN Ltd. (a 47% owned UK
affiliate), Medway Power Ltd. (a 25% owned UK affiliate), Light (a 13.75% owned
Brazilian affiliate), Chigen's affiliates, and CEMIG (a 9.45% owned Brazilian
affiliate) for the six months ended June 30, 1997 and the condensed income
statement information of NIGEN Ltd., Medway Power Ltd., Light, CEMIG, Chigen's
affiliates, Northern/AES Energy (a 45% owned U.S. affiliate) and Kingston (a 50%
owned Canadian affiliate) for the six months ended June 30, 1998.
<TABLE>
<CAPTION>
6/30/97 6/30/98
------- -------
<S> <C> <C>
Revenues $ 1,201 $ 2,328
Operating Income 282 617
Net Income 188 526
</TABLE>
5. Litigation
The Company is involved in certain legal proceedings in the normal course
of business. It is the opinion of the Company that none of the pending
litigation is expected to have a material adverse effect on its results of
operations or financial position.
6. Acquisitions
In February 1998, the Company acquired approximately 80% of Compania de Luz
Electrica de Santa Ana ("CLESA"), an electricity distribution company in El
Salvador, for approximately $96 million. The acquisition was accounted for as a
purchase.
In April 1998, AES Caracoles, a subsidiary of the Company, took over the
operations of a 45 MW hydroelectric plant, and signed a 40-year concession
agreement for its 230 MW construction project in San Juan Province, Argentina.
The signing of the concession and takeover marks the completion of the first
phase of the project. At this time, AES has not made any cash investment in the
project.
In May 1998, AES Southland and other subsidiaries of the Company completed
the purchase of three natural gas-fired electric generating stations located in
southern California from Southern California Edison for approximately $781
million.
6
<PAGE>
In June 1998, a subsidiary of AES acquired approximately 90% of Empresa
Distribuidora de La Plata S.A. ("EDELAP"), an electric distribution company in
the province of Buenos Aires, Argentina for approximately $350 million.
The acquisitions above were accounted for as purchases. The purchase price
allocations have been prepared on a preliminary basis subject to adjustments
resulting from additional facts that may come to light when the engineering,
environmental, and legal analysis are completed during the allocation periods.
During 1997, the Company acquired EDEN and EDES (May 1997), CEMIG, Los
Mina, Kingston, Elsta, and Indian Queens (June 1997) and Sul and Altai (October
1997), all of which were also accounted for as purchases.
The accompanying statements of operations include the operating results or
equity in earnings for all of the acquired companies from the dates of the
acquisitions or investments. The following table presents supplemental unaudited
pro forma operating information as if each of the acquisitions or investments
had occurred at the beginning of the periods presented (in millions, except per
share amounts):
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
6/30/97 6/30/98
------------ -------------
<S> <C> <C>
Revenues 1,024 1,240
Net Income 44 133
Basic Earnings Per Share 0.25 0.76
Diluted Earnings Per Share 0.25 0.74
</TABLE>
7. Comprehensive Income
The Company has adopted SFAS No. 130, Reporting Comprehensive Income. The
components of other comprehensive income include $21 million and $45 million of
foreign currency translation adjustment losses for the quarters ended June 30,
1997 and 1998, respectively, and $40 million and $95 million for the six months
ended June 30, 1997 and 1998, respectively. Comprehensive income is $21 million
and $25 million for the quarter ended June 30, 1997 and 1998, respectively, and
$42 million and $41 million for the six months ended June 30, 1997 and 1998,
respectively.
8. Subsequent Events
In August 1998, the Company sold 4.25 million shares of its common stock
from its shelf registration statement for gross proceeds of approximately $189.7
million or $44.625 per share. Simultaneously, the Company issued $150 million of
4.5% convertible junior subordinated debentures due 2005.
Also in August, the Company announced that it won a bid to acquire six
coal-fired, electric generating plants from NGE Generation, Inc., an affiliate
of New York State Electric & Gas Corporation ("NYSEG"), for approximately $950
million.
7
<PAGE>
ITEM 2. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
INTRODUCTION
The AES Corporation and its subsidiaries and affiliates (collectively "AES"
or the "Company") are helping to meet the world's needs by supplying electricity
to customers in many countries in a socially responsible way.
Until recently, the Company's sales of electricity were made almost
exclusively to customers (generally electric utilities or regional electric
companies) on a wholesale basis for further resale to end users. This is often
referred to as the electricity "generating" business. Sales are usually made
under long-term contracts from power plants owned by the Company. The Company's
ownership portfolio of power facilities includes new plants constructed for such
purposes ("greenfield" plants) as well as existing power plants acquired through
competitively bid privatization initiatives and negotiated acquisitions.
In its electricity generation business, AES now owns and operates (entirely
or in part) a diverse portfolio of electric power plants (including those within
the integrated distribution companies discussed below) with a total capacity of
21,762 megawatts ("MW"). Of that total, 5,025 MW (nine plants) are located in
the United States, 1,588 MW (four plants) are in the United Kingdom, 885 MW (six
plants) are in Argentina, 728 MW (seven plants) are in China, 1,281 MW (three
plants) are in Hungary, 5,856 MW (thirty-nine plants) are in Brazil, 5,384 MW
(seven plants) are in Kazakhstan (including 4,000 MW attributable to Ekibastuz
which currently has a capacity factor of less than 20%), 210 MW (one plant) are
in the Dominican Republic, 110 MW (one plant) are in Canada, and 695 MW (two
plants) are in Pakistan.
AES also is currently in the process of adding approximately 5,806 MW to
its operating portfolio by constructing several new plants. These include a 180
MW coal-fired plant in the United States, three coal-fired plants in China
totaling 2,189 MW, one natural gas-fired and two hydro plants in Brazil totaling
1,200 MW, a 230 MW natural gas-fired plant in the United Kingdom, a 405 MW
natural gas-fired plant in the Netherlands, a 288 MW kerosene-fired plant in
Australia, an 830 MW natural gas-fired plant in Argentina and a 484 MW natural
gas-fired plant in Mexico.
As a result, AES's total of 90 power plants in operation or under
construction approximates 27,568 MW, and net equity ownership (total MW adjusted
for the Company's ownership percentage) represents approximately 16,290 MW.
Beginning in 1996, AES also has acquired interests (both majority and
minority) in companies that sell electricity directly to commercial, industrial,
governmental and residential customers. This is often referred to as the
electricity "distribution" business. Electricity sales by AES's distribution
businesses are generally made pursuant to the provisions of long-term
electricity sale concessions granted by the appropriate governmental authority
as part of the original privatization of each distribution company. In certain
cases, these distribution companies are "integrated", in that they also own
electric power plants for the purpose of generating a portion of the electricity
they sell. Each distribution company also purchases, in varying proportions,
electricity from third-party wholesale suppliers, including in certain cases,
other subsidiaries of the Company.
AES has majority ownership in three distribution companies in Argentina,
one in Brazil and one in El Salvador, and less than majority ownership in three
additional distribution companies in Brazil. These eight companies serve a total
of approximately 12.8 million customers with sales exceeding 100,000 gigawatt
hours. On a net equity basis, AES's
8
<PAGE>
ownership represents approximately 2.7 million customers and sales exceeding
20,500 gigawatt hours.
AES does not limit its investments solely to the most developed countries
or economies, or only to those countries with investment grade sovereign credit
ratings. In certain locations, particularly developing countries or countries
that are in transition from centrally planned to market oriented economies, the
electricity purchasers, both wholesale and retail, may experience difficulty in
meeting contractual payment obligations, and in such situations, that customer
may be subject to contractually imposed interest or penalty charges. The
prolonged failure of any of the Company's significant customers to fulfill its
contractual payment obligations could have a substantial negative impact on
AES's results of operations.
Beginning in August 1996 and continuing through June 30, 1998, AES has
recorded a provision of $34 million associated with aggregate outstanding
receivables (excluding VAT) of $73 million at June 30, 1998 related to the
operations of the Ekibastuz power plant in Kazakstan. Approximately $34 million
of the aggregate balance (excluding VAT), before considering the provision, is
due from a government-owned distribution company. There can be no assurance of
the ultimate collectibility of these amounts owed to Ekibastuz, or as a result,
the recoverability of the related net assets (totaling $83 million at June 30,
1998) or additional amounts the Company may invest.
Certain subsidiaries and affiliates of the Company (domestic and non-U.S.)
have signed long-term contracts or similar arrangements for the sale of
electricity and are in various stages of developing the related greenfield power
plants. There exist substantial risks to their successful completion, including,
but not limited to, those relating to failures of siting, financing,
construction, permitting, governmental approvals or termination of the power
sales contract as a result of a failure to meet milestones. As of June 30, 1998,
capitalized costs for projects under development were approximately $96 million.
The Company believes that these costs are recoverable, however, no assurance can
be given that changes in circumstances related to individual development
projects will not occur or that any of these projects will be completed and
reach commercial operation.
The Company wishes to caution readers that there are important factors and
areas affecting the Company which involve risk and uncertainty. These factors
are set forth in the Company's Annual Report on Form 10-K filed with the
Commission for the year ended December 31, 1997 under the heading "Cautionary
Statement and Risk Factors", and should be considered when reviewing the
Company's business. Such factors are relied upon by AES in issuing any
forward-looking statements and could affect AES's actual results and cause such
results to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, AES. Some or all of these factors may apply
to the Company's businesses as currently maintained or to be maintained.
ACQUISITIONS AND OTHER EVENTS
In May 1998, AES Southland and other subsidiaries of AES completed the
purchase of three electric generating stations from Southern California Edison
("Edison") for approximately $781 million. In connection with the acquisition,
the Company obtained $713 million of non-recourse project financing. AES
Alamitos (located in Long Beach), AES Redondo Beach and AES Huntington Beach all
fire natural gas with a combined summer peak generating capacity of 3,956 MW.
AES has contracted to provide fuel conversion services from the facilities to
Williams Energy Services Company ("Williams"). Under the long-term agreement,
Williams delivers gas to the plants and owns and markets the electrical output.
Project debt financing for the acquisition was provided by a syndicate of banks
led by Credit
9
<PAGE>
Suisse First Boston. Pursuant to California's electricity restructuring law,
Edison will remain under contract to operate and maintain the facilities for two
years, after which AES will assume operations.
Also in May, a subsidiary of AES entered into an agreement with Hanwha
Energy Co., Ltd. of South Korea ("Hanwha") to acquire Hanwha's power generation
assets located in the City of Inchon, South Korea, consisting of 1,500 MW in
operation and an additional 300 MW under construction, for approximately $873
million. Closing of the transactions contemplated by the agreement is subject to
significant conditions including negotiation and execution of definitive
documentation. The agreement requires AES to (i) fund $371 million of the
purchase price upon execution of a business transfer agreement and satisfaction
of certain conditions precedent contained therein, (ii) assume up to
approximately $273 million of existing project debt and leases upon closing, and
(iii) commit to fund the remaining $230 million towards construction of the
additional 300 MW. In connection with this potential transaction, AES has
entered into a $380 million standby non-recourse bridge loan with an affiliate
of Morgan Stanley & Co. Incorporated, secured by approximately 4 million shares
of common stock, to fund the initial $371 million payment. There can be no
assurance that the Hanwha acquisition will be consummated and the parties have
currently terminated negotiations on the transaction.
In June 1998, a subsidiary of the Company raised $173 million of
non-recourse project financing for the $230 million AES Merida III 484 MW
gas-fired combined cycle power plant currently under construction in the City of
Merida, Yucatan, Mexico. When constructed and in operation, the new facility
will provide power to the state utility in Mexico, Comision Federal de
Electricidad, under a 25- year power purchase agreement.
Also in June, a subsidiary of AES was selected by the Bangladesh Power
Development Board as the First-Ranked Sponsor to build, own and operate a 450 MW
(net) gas-fired combined cycle power plant at a site near Dhaka, Bangladesh on
the Meghna River (the "Meghnaghat Project"). The site is about 3 miles from
AES's Haripur project, a 360 MW gas-fired plant that is currently under
development. AES was awarded the Haripur project in January 1998. Electricity
from the Meghnaghat Project is anticipated to be sold to the Bangladesh Power
Development Board under the terms of a 22-year power purchase agreement, which
is expected to be signed shortly. Commercial operations of the Meghnaghat plant
is expected to commence in the year 2000. Titus Gas Transmission and
Distribution Company, a subsidiary of Petrobangla, will supply natural gas to
the facility from a nearby pipeline for the term of the power purchase
agreement.
Also in June, a subsidiary of AES acquired approximately 90% of Empresa
Distribuidora de La Plata S.A. ("EDELAP"), an electric distribution company in
the province of Buenos Aires, Argentina for approximately $350 million from a
joint venture of Houston Industries Energy, Inc. and a subsidiary of Techint
S.A., an Argentine industrial firm. EDELAP serves approximately 278,000
customers in and around the city of La Plata, the capital of Buenos Aires
Province. A $193 million non-recourse loan was provided by Citibank for a
portion of the purchase price. The balance of the purchase price was financed
through a $165 million bridge loan to a subsidiary of AES provided by an
affiliate of Salomon Brothers Holding Company Inc. secured by 8.4 million shares
of the Registrant's common stock. AES was able to renegotiate the terms of the
bridge loan such that the Company was not obligated to prepay the bridge loan as
a result of the offerings of common stock and convertible debentures discussed
below.
In July, two subsidiaries of AES, AES Lal Pir Limited ("AES Lal Pir") and
AES PakGen (Pvt) Company ("AES PakGen"), received "Notices of Intent to
Terminate"
10
<PAGE>
certain project agreements from the Government of Pakistan. AES Lal Pir is a 351
MW (net) oil-fired thermal power plant located in the Punjab Province of
Pakistan. AES PakGen is a 344 MW (net) oil-fired thermal power plant located
adjacent to AES Lal Pir. The notices issued to these projects assert that AES's
subsidiaries made inaccurate anti-corruption representations to the Government
of Pakistan. AES believes that these notices are similar to notices received by
other independent power producers in Pakistan. AES strongly denies the
allegations made in the Notices of Intent to Terminate and intends to vigorously
pursue all available legal options to enforce and preserve its contractual
rights under the project agreements. To that end, in August 1998, AES Lal Pir
and AES PakGen filed a Request for Arbitration with the International Chamber of
Commerce International Court of Arbitration seeking a declaration that the
purported Notices of Intent to Terminate are invalid because, among other
things, the allegations contained therein have no basis in fact, there has been
no breach or event of default of any of the project documents relating to the
allegations and the Government of Pakistan has provided no evidence to
substantiate any of the allegations. Despite these notices, both plants continue
to operate normally and the customer, the Pakistan Water and Power Development
Authority, has continued to make its payments in accordance with the contracts.
In August 1998, the Company announced that it won a bid to acquire six
coal-fired, electric generating plants from NGE Generation, Inc., an affiliate
of New York State Electric & Gas Corporation ("NYSEG"), for approximately $950
million. The facilities represent the bulk of NYSEG's coal-fired generation
assets and were auctioned as part of NYSEG's implementation of its restructuring
plan in accordance with New York's introduction of wholesale and retail
competition into the state's electricity generation market. The six facilities,
located in western and west-central New York, are Kintigh (675 MW), Milliken
(306 MW), Goudey (126 MW), Greenidge (161 MW), Hickling (85 MW) and Jennison (71
MW). The facilities include low-cost generating plants and, with the exception
of some of the smaller units, are expected to run as based-load units in a
competitive New York electricity generation market. Sulfur dioxide scrubbers
have already been installed at the largest plants, Kintigh and Milliken. The
acquisition is expected to be completed during the first quarter of 1999 and is
subject to customary closing conditions, including the receipt of various
governmental approvals.
Also in August, the Company sold 4.25 million shares of its common stock
from its shelf registration statement for gross proceeds of approximately $189.7
million or $44.625 per share. Simultaneously, the Company issued $150 million of
4.5% convertible junior subordinated debentures due 2005. AES used the combined
net proceeds from the offerings of approximately $330 million for general
corporate purposes and to repay amounts outstanding under the Company's
Revolver.
SECOND QUARTER 1998 AND 1997 RESULTS OF OPERATIONS
Revenues increased 116%, or approximately $304 million, to $565 million
from the second quarter of 1997 to the second quarter of 1998. The increase in
revenues was due primarily to the acquisition of EDEN and EDES in May 1997, Los
Mina in June 1997, Altai and Sul in October 1997, the commencement of commercial
operations at Jiaozou and Hefei in August 1997, Lal Pir in November 1997 and Pak
Gen in February 1998, and the acquisitions of CLESA in February 1998 and
Southland in May 1998, offset slightly by lower production at Ekibastuz and a
planned outage at Thames. Cost of sales and services increased 136%, or
approximately $222 million, to $385 million from the second quarter of 1997 to
the second quarter of 1998. The increase in cost of sales and services was
primarily due to the new businesses acquired and the start of commercial
operations as discussed above, offset in part, by lower production at Ekibastuz.
Gross margin, which represents total revenues reduced by
11
<PAGE>
cost of sales and services (before consideration of the provision to reduce
contract receivables), increased 84%, or approximately $82 million, to $180
million during the same period. The increase in gross margin was primarily due
to the factors discussed above. Gross margin as a percentage of revenues (net of
the provision to reduce contract receivables) decreased from 38% in the second
quarter of 1997 to 32% in the second quarter of 1998, primarily due to lower
relative gross margin percentages of the newly acquired businesses.
Revenues increased 118%, or approximately $618 million from the first six
months of 1997 to the first six months of 1998. The increase in revenues was
primarily due to the acquisitions of EDEN, EDES, Los Mina, Jiaozou, Hefei,
Altai, Sul, CLESA and Southland, and the commencement of commercial operations
at Lal Pir and Pak Gen. Cost of sales and services increased 137% or
approximately $452 million from the first half of 1997 to the same period of
1998. The increase was primarily due to the recent acquisitions and the
commencement of commercial operations as discussed above. Gross margin (before
consideration of the provision to reduce contract receivables) increased 86%, or
approximately $166 million to $358 million from the first six months of 1997 to
the first six months of 1998. The increase in gross margin was primarily due to
the factors discussed above. Gross margin as a percentage of revenues (net of
the provision to reduce contract receivables) decreased from 37% for the first
half of 1997 to 31% for the first half of 1998. The decrease was primarily due
to lower relative gross margin percentages of the newly acquired businesses.
Selling, general and administrative expenses increased 100%, or
approximately $6 million to $12 million from the second quarter of 1997 to the
second quarter of 1998, and as a percentage of total revenue, were 2% for both
quarters. Selling, general and administrative expenses increased 80%, or
approximately $12 million to $27 million from the first six months of 1997 to
the first six months of 1998 and as a percentage of revenues, were 3% for the
first half of 1997 and 2% for the first half of 1998. The increases were
primarily due to increased business development activities. The Company's
selling, general and administrative costs do not necessarily vary with changes
in revenues.
Operating income increased 89%, or approximately $79 million to $168
million from the second quarter of 1997 to the second quarter of 1998 and
increased 89%, or $149 million to $316 million from the first half of 1997 to
the first half of 1998. The increases were the result of the factors discussed
above.
Interest expense increased 106%, or approximately $51 million to $99
million from the second quarter of 1997 to the second quarter of 1998 and
increased 120%, or approximately $110 million to $202 million from the first six
months of 1997 to the first six months of 1998. The increases were the result of
additional interest expense associated with the Company's $250 million 5 3/8%
TECONS, the Company's outstanding senior subordinated notes, the TECONS and
project financing debt issued in 1997 relating to the acquisitions during the
year, offset by interest capitalized in the second quarter related to project
construction at CEMIG.
Interest income increased 70%, or approximately $7 million to $17 million
from the second quarter of 1997 to the second quarter of 1998 and increased 72%,
or approximately $13 million to $31 million from the first half of 1997 to the
first half of 1998. The increases were due primarily to interest income
associated with late payments on customer accounts at certain distribution
subsidiaries, interest income on higher cash balances at other subsidiaries and
interest on debt service reserve accounts.
Equity in earnings of affiliates (before income taxes) increased 153%, or
approximately $26 million to $43 million from the second quarter of 1997 to the
same period
12
<PAGE>
of 1998, and increased 170%, or approximately $63 million to $100 million from
the first six months of 1997 to the first six months of 1998. The increases were
due primarily to earnings from the Company's June, 1997 investment in CEMIG, and
a one time gain at Light during the second quarter of 1998 associated with a
pension curtailment.
Income taxes increased 64%, or approximately $14 million to $36 million
from the second quarter of 1997 to the second quarter of 1998 and increased 64%,
or approximately $27 million to $69 million from the first six months of 1997 to
the same period of 1998. The increases were due primarily to higher income
before taxes.
Minority interest expense increased 450%, or approximately $18 million to
$22 million from the second quarter of 1997 to the same period of 1998 and
increased 567%, or approximately $34 million to $40 million from the first six
months of 1997 to the first six months of 1998. The increases were primarily due
to the sale of a portion of the Company's equity investment in CEMIG (January
1998) and the acquisition of an approximate 60% interest in EDEN and EDES (May
1997).
FINANCIAL POSITION, CASH FLOWS AND FOREIGN CURRENCY EXCHANGE RATES
At June 30, 1998, cash and cash equivalents totaled approximately $367
million, as compared to $302 million at December 31, 1997. The $65 million
increase in cash resulted from a use of $1,331 million for investing activities
which were funded by $1,198 million from financing activities and $198 million
provided by operating activities. Significant investing activities included
project construction at Barry, Mt. Stuart, Pak Gen and Warrior Run, the
acquisitions of CLESA, Southland, and EDELAP, and proceeds from the sales of the
Company's 20% interest in Hazelwood and a portion of the Company's CEMIG
investment. The net use of cash from financing activities was primarily the
result of repayments of $458 million of project financing debt offset by
borrowings of $372 million under the Company's Revolver, and borrowing $1,449
million of project financing debt. Unrestricted net cash flow of the parent
company totaled approximately $347 million for the four quarters ended June 30,
1998.
The increase in electric generation and distribution assets of $1,525
million to $5,334 million from December 31, 1997 to June 30, 1998 was due
primarily to the CLESA, Southern, and EDELAP acquisitions and Pak Gen's
commencement of operations. The decrease in construction in progress of $42
million to $642 million was due to construction completion at Pak Gen offset by
the progress payments at the other facilities in construction.
Through its equity investments in foreign affiliates and subsidiaries, AES
operates in jurisdictions with currencies other than the Company's functional
currency, the U.S. dollar. Such investments and advances were made to fund
equity requirements and to provide collateral for contingent obligations. Due
primarily to the long-term nature of the investments and advances, the Company
accounts for any adjustments resulting from translation of the financial
statements of its foreign investments as a charge or credit directly to a
separate component of stockholders' equity until such time as the Company
realizes such charge or credit. At that time, any differences would be
recognized in the statement of operations as gains or losses.
13
<PAGE>
In addition, certain of the Company's foreign subsidiaries have entered
into obligations in currencies other than their own functional currencies or the
U.S. dollar. These subsidiaries have attempted to limit potential foreign
exchange exposure by entering into revenue contracts that adjust to changes in
the foreign exchange rates. Certain foreign affiliates and subsidiaries operate
in countries where the local inflation rates are greater than U.S. inflation
rates. In such cases the foreign currency tends to devalue relative to the U.S.
dollar over time. The Company's subsidiaries and affiliates have entered into
revenue contracts which attempt to adjust for these differences, however, there
can be no assurance that such adjustments will compensate for the full effect of
currency devaluation, if any. The Company had approximately $226 million in
cumulative foreign currency translation adjustment losses at June 30, 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The company believes that there have been no material changes in exposure
to market risks during the second quarter of 1998 set forth in the Company's
Annual Report filed with the Commission on Form 10-K for the year ended December
31, 1997.
14
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in certain legal proceedings in the normal course
of business. It is the opinion of the Company that none of the pending
litigation is expected to have a material adverse effect on its results of
operations or financial position.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In August, the Company sold 4.25 million shares of its common stock from
its shelf registration statement for gross proceeds of approximately $189.7
million or $44.625 per share. Simultaneously, the Company issued $150 million of
4.5% convertible junior subordinated debentures due 2005. AES used the combined
net proceeds from the offerings of approximately $330 million for general
corporate purposes and to repay amounts outstanding under the Company's
Revolver.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Election of Directors
<TABLE>
<CAPTION>
Nominee For Against/Abstain
- ------- --- ---------------
<S> <C> <C>
Roger W. Sant 147,318,762 1,216,197
Dennis W. Bakke 147,425,652 1,109,407
Alice F. Emerson 147,433,961 1,101,098
Bob Hemphill 147,329,278 1,205,781
Frank Jungers 147,289,955 1,245,104
John McArthur 147,739,133 795,926
Hazel O'Leary 147,729,322 805,737
Thomas I. Unterberg 146,600,000 1,935,059
Robert H. Waterman, Jr 147,326,731 1,208,328
<CAPTION>
Election of Auditors
For Against Abstain
- --- ------- -------
<C> <C> <C>
147,907,788 578,999 48,272
</TABLE>
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
15
<PAGE>
3.1 Fifth Amended and Restated Certificate of Incorporation of The AES
Corporation.
3.2 By-Laws of The AES Corporation, as amended.
4.1 Amended and Restated Declaration of Trust of AES Trust I, among The
AES Corporation, The First National Bank of Chicago and First Chicago
Delaware, Inc., to provide for the issuance of the $2.6875 Term
Convertible Securities, Series A is incorporated herein by reference
to Exhibit 4.1 to Annual Report on Form 10-K of the Registrant for the
year ended December 31, 1997 filed March 30, 1998.
4.2 Junior Subordinated Indenture, between The AES Corporation and The
First National Bank of Chicago, to provide for the issuance of the
$2.6875 Term Convertible Securities, Series A is incorporated herein
by reference to Exhibit 4.1 to Annual Report on Form 10-K of the
Registrant for the year ended December 31, 1997 filed March 30, 1998.
4.3 First Supplemental Indenture to Junior Subordinated Indenture, between
The AES Corporation and The First National Bank of Chicago, as
trustee, to provide for the issuance of the $2.6875 Term Convertible
Securities, Series A is incorporated herein by reference to Exhibit
4.1 to Annual Report on Form 10-K of the Registrant for the year ended
December 31, 1997 filed March 30, 1998.
4.4 Guarantee Agreement, between The AES Corporation and The First
National Bank of Chicago, as initial guarantee trustee, to provide for
the issuance of the $2.6875 Term Convertible Securities, Series A is
incorporated herein by reference to Exhibit 4.1 to Annual Report on
Form 10-K of the Registrant for the year ended December 31, 1997 filed
March 30, 1998.
4.5 Second Supplemental Indenture dated as of October 13, 1997 between the
Company and the First National Bank of Chicago, as trustee, to provide
for the issuance from time to time of the 10.25% Senior Subordinated
Notes Due 2006, is incorporated herein by reference to Exhibit 4.2.1
of the Registration Statement on Form S-3/A (Registration No.
333-39857) filed November 19, 1997.
4.6 Indenture dated as of October 29, 1997 between The AES Corporation and
The First National Bank of Chicago, as trustee, to provide for the
issuance from time to time of the 8.50% Senior Subordinated Notes due
2007 of the Company and the 8.875% Senior Subordinated Debentures due
2027, is incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 (Registration No. 333-44845) filed
January 23, 1998.
4.7 First Supplemental Indenture dated as of November 21, 1997 between The
AES Corporation and The First National Bank of Chicago, as trustee, to
provide for the issuance from time to time of the 8.50% Senior
Subordinated Notes due 2007 of the Company and the 8.875% Senior
Subordinated Debentures due 2027, is incorporated herein by reference
to Exhibit 4.1.2 to the Registration Statement on Form S-4
(Registration No. 333-44845) filed January 23, 1998.
4.8 Junior Subordinated Debt Trust Securities Indenture dated as of March
1, 1997 between the Company and The First National Bank of Chicago, to
provide for the issuance of the $2.75 Term Convertible Securities,
Series B, is incorporated herein by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (Registration No. 333-46189) filed
February 12, 1998.
4.9 Second Supplemental Indenture dated as of October 29, 1997 between the
Company and The First National Bank of Chicago, to provide for the
issuance of the $2.75 Term Convertible Securities, Series B, is
incorporated herein by
16
<PAGE>
reference to Exhibit 4.1.1 to the Registration Statement on Form S-3
(Registration No. 333-46189) filed February 12, 1998.
4.10 Amended and Restated Declaration of Trust of AES Trust II, to provide
for the issuance of the $2.75 Term Convertible Securities, Series B,
is incorporated herein by reference to Exhibit 4.3 to the Registration
Statement on Form S-3 (Registration No. 333-46189) filed February 12,
1998.
4.11 Restated Certificate of Trust of AES Trust II, to provide for the
issuance of the $2.75 Term Convertible Securities, Series B, is
incorporated herein by reference to Exhibit 4.4 to the Registration
Statement on Form S-3 (Registration No. 333-46189) filed February 12,
1998.
4.12 Form of Preferred Security, to provide for the issuance of the $2.75
Term Convertible Securities, Series B, is incorporated herein by
reference to Exhibit 4.5 to the Registration Statement on Form S-3
(Registration No. 333-46189) filed February 12, 1998.
4.13 Form of Junior Subordinated Debt Trust Security, to provide for the
issuance of the $2.75 Term Convertible Securities, Series B, is
incorporated herein by reference to Exhibit 4.6 to the Registration
Statement on Form S-3 (Registration No. 333-46189) filed February 12,
1998.
4.14 Preferred Securities Guarantee with respect to Preferred Securities,
to provide for the issuance of the $2.75 Term Convertible Securities,
Series B, is incorporated herein by reference to Exhibit 4.7 to the
Registration Statement on Form S-3 (Registration No. 333-46189) filed
February 12, 1998.
4.15 Junior Subordinated Indenture dated as of August 10, 1998, between The
AES Corporation and The First National Bank of Chicago, as trustee, to
provide for the issuance of the 4.5% Convertible Junior Subordinated
Debentures due 2005.
4.16 First Supplemental Indenture dated as of August 10. 1998, to the
Junior Subordinated Indenture dated as of August 10, 1998, between The
AES Corporation and The First National Bank of Chicago, as trustee, to
provide for the issuance of the 4.5% Convertible Junior Subordinated
Debentures due 2005.
4.17 Other instruments defining the rights of holders of long-term
indebtedness of the Registrant and its consolidated subsidiaries.
10.1 Amended Power Sales Agreement, dated as of December 10, 1985, between
Oklahoma Gas and Electric Company and AES Shady Point, Inc. is
incorporated herein by reference to Exhibit 10.5 to the Registration
Statement on Form S-1 (Registration No. 33-40483).
10.2 First Amendment to the Amended Power Sales Agreement, dated as of
December 19, 1985, between Oklahoma Gas and Electric Company and AES
Shady Point, Inc. is incorporated herein by reference to Exhibit 10.45
to the Registration Statement on Form S-1 (Registration No. 33-46011).
10.3 Electricity Purchase Agreement, dated as of December 6, 1985, between
The Connecticut Light and Power Company and AES Thames, Inc. is
incorporated herein by reference to Exhibit 10.4 to the Registration
Statement on Form S-1 (Registration No. 33-40483).
10.4 Power Purchase Agreement, dated March 25, 1988, between AES Barbers
Point, Inc. and Hawaiian Electric Company, Inc., as amended, is
incorporated herein by reference to Exhibit 10.6 to the Registration
Statement on Form S-1 (Registration No. 33-40483).
10.5 The AES Corporation Profit Sharing and Stock Ownership Plan is
incorporated herein by reference to Exhibit 4(c)(1) to the
Registration Statement on Form S-8 (Registration No. 33-49262).
17
<PAGE>
10.6 The AES Corporation Incentive Stock Option Plan of 1991, as amended,
is incorporated herein by reference to Exhibit 10.30 to the Annual
Report on Form 10-K of the Registrant for the fiscal year ended
December 31, 1995.
10.7 Applied Energy Services, Inc. Incentive Stock Option Plan of 1982 is
incorporated herein by reference to Exhibit 10.31 to the Registration
Statement on Form S-1 (Registration No. 33-40483).
10.8 Deferred Compensation Plan for Executive Officers, as amended, is
incorporated herein by reference to Exhibit 10.32 to Amendment No. 1
to the Registration Statement on Form S-1 (Registration No. 33-40483).
10.9 Deferred Compensation Plan for Directors is incorporated herein by
reference to Exhibit 10.9 to the Quarterly Report on Form 10-Q of the
Registrant for the quarter ended March 31, 1998, filed May 15, 1998.
10.10The AES Corporation Stock Option Plan for Outside Directors is
incorporated herein by reference to Exhibit 10.43 to the Annual Report
on Form 10-K of Registrant for the Fiscal Year ended December 31,
1991.
10.11The AES Corporation Supplemental Retirement Plan is incorporated
herein by reference to Exhibit 10.64 to the Annual Report on Form 10-K
of the Registrant for the year ended December 31, 1994.
11 Statement of Computation of Earnings Per Share.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
During the quarter ended June 30, 1998, the Company did not file any
Current Reports on Form 8-K.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE AES CORPORATION
(Registrant)
Date: August 14, 1998 By: /s/ Barry J. Sharp
------------------
Name: Barry J. Sharp
Title: Senior Vice
President and Chief
Financial Officer
19
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Description of Exhibit Numbered Page
<S> <C>
3.1 Fifth Amended and Restated Certificate of Incorporation of The AES
Corporation.
3.2 By-Laws of The AES Corporation, as amended
4.15 Junior Subordinated Indenture dated as of August 10, 1998, between The AES
Corporation and The First National Bank of Chicago, as trustee, to provide
for the issuance of the 4.5% Convertible Junior Subordinated Debentures due
2005.
4.16 First Supplemental Indenture dated as of August 10. 1998, to the Junior
Subordinated Indenture dated as of August 10, 1998, between The AES
Corporation and The First National Bank of Chicago, as trustee, to provide
for the issuance of the 4.5% Convertible Junior Subordinated Debentures due
2005.
4.17 Other instruments defining the rights of holders of long-term indebtedness
of the Registrant and its consolidated subsidiaries.
11 Statement of Computation of Earnings Per Share.
27 Financial Data Schedule.
</TABLE>
EXHIBIT 3.1
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE AES CORPORATION
The AES Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), hereby certifies
as follows:
1. The present name of the corporation is The AES Corporation.
2. The name under which the corporation was originally incorporated is
Applied Energy Services, Inc.; and the date of filing the original Certificate
of Incorporation of the Corporation with the Secretary of the State of Delaware
is January 28, 1981.
3. The Certification of Incorporation of the Corporation, as heretofore
amended or supplemented, is hereby restated and further amended and attached
hereto as Exhibit A.
4. The Fifth Amended and Restated Certificate of Incorporation, which
further amends the Certificate of Incorporation of the Corporation, was proposed
by the Board of Directors of the Corporation and was duly adopted by its
stockholders in the manner and by the vote prescribed by Sections 228 and 242 of
the General Corporation Law of the State of Delaware.
5. The Fifth Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Section 245 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this certificate this 27th
day of May 1998.
/s/ William R. Luraschi
----------------------------
William R. Luraschi
Vice President and Secretary
The AES Corporation
<PAGE>
EXHIBIT A
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE AES CORPORATION
PURSUANT TO SECTION 245 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
Article I. The name of the corporation is The AES Corporation (the
"Corporation").
Article II. The address of the Corporation's registered office in the State
of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is Corporation Service
Company.
Article III. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware, as amended from time to time.
Article IV. 1. The total number of shares of all classes of capital stock
that the Corporation is authorized to issue is five hundred fifty million
(550,000,000), of which five hundred million (500,000,000) shall be Common
Stock, par value one cent ($0.01) per share, and fifty million (50,000,000)
shall be Preferred Stock, without par value. The designations and the powers,
preferences and rights of the Common Stock and the Preferred Stock, and the
qualifications, limitation or restrictions thereof, are as provided in or
pursuant to this Article IV.
2. (a) The rights of holders of Common Stock to receive dividends or to
share in the distribution of assets in the event of liquidation, dissolution or
winding up of the affairs of the Corporation shall be subject to the preferences
and other rights of the Preferred Stock as may be fixed in this Certificate of
Incorporation or in the resolution or resolutions of the Board of Directors
providing for the issuance of such Preferred Stock.
(b) The holders of Common Stock shall be entitled to one vote for each
share of Common Stock held by them of record at the time for determining the
holders thereof entitled to vote.
3. Authority is hereby vested in the Board of Directors to issue from time
to time the Preferred Stock in one or more classes or series and to fix by the
resolution or resolutions providing for the issuance of shares of any such class
or series the voting powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such class or series to the full extent
permitted by this Certificate of Incorporation and the General Corporation Law
of the State of Delaware. The authority of the Board of Directors with respect
to each such series shall include, but not be limited to, determination of the
following:
(i) The number of shares to constitute such class or series, and the
distinctive designation thereof;
<PAGE>
(ii) The voting powers, full or limited, if any, of such class or series;
(iii) The rate of dividends payable on shares of such class or series, the
conditions on which and the times when such dividends are payable, the
preference to, or the relations to, the payment of the dividends payable on any
other class or series of stock, whether cumulative or noncumulative, and, if
cumulative, the date from which dividends on shares of such class or series
shall be cumulative;
(iv) The right, if any, of the Corporation to redeem shares of such class
or series and the terms and conditions of such redemption
(v) The requirement of any sinking fund or funds to be applied to the
purchase or redemption of shares of such class or series and, if so, the amount
of such fund or funds and the manner of application;
(vi) The rights of shares of such class or series upon the liquidation,
dissolution or winding up of, or upon any distribution of the assets of, the
Corporation;
(vii) The rights, if any, of the holders of shares of such class or series
to convert such shares into, or to exchange such shares for, shares of any other
class or series of stock and the price or prices or rate or rates of exchange at
which such shares shall be convertible or exchangeable and any adjustments
thereto, and any other terms and conditions of such conversion or exchange; and
(viii) Any other preferences and relative, participating, optional or other
special rights of shares of such class or series, and qualifications,
limitations or restrictions including, without limitation, any restriction on an
increase in the number of shares of any class or series theretofore authorized
and any qualifications, limitations or restrictions of rights or powers to which
shares of any future class or series shall be subject.
4. The number of authorized shares of any class or classes of stock of the
Corporation may be increased or decreased by the affirmative vote of the holders
of a majority of the stock of the Corporation that is entitled to vote, without
a separate class vote of any class or classes of stock of the Corporation,
except as may be otherwise provided in this Certificate of Incorporation or in
the resolution or resolutions fixing the voting rights of any class or series of
the Preferred Stock.
5. No holder of Common Stock or Preferred Stock, as such, shall have or be
entitled to any preemptive right whatsoever.
Article V. The Corporation is to have perpetual existence.
Article VI. The Board of Directors is expressly authorized to adopt, alter
or repeal the By-Laws of the Corporation, except for any By-Law that by its
terms states that it may be amended or repealed only by action of the
stockholders.
Article VII. Meetings of stockholders may be held at such place, either
within or without the state of Delaware, as the By-Laws may provide. Elections
of directors need not be by written ballot unless the By-Laws of the Corporation
shall so provide.
Article VIII. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter
<PAGE>
prescribed by General Corporation Law of the State of Delaware, and all rights
conferred upon stockholders herein are granted subject to this reservation.
Article IX. The number of directors of the Corporation shall be fixed from
time to time pursuant to the By-Laws of the Corporation.
Article X. No director of this Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. Neither the amendment nor repeal of this Article
X, nor the adoption of any provision of this Certificate of Incorporation
inconsistent with this Article X, shall be effective with respect to any cause
of action, suit, claim or other matter that, but for this Article X, would
accrue or arise prior to such amendment, repeal or adoption of an inconsistent
provision.
EXHIBIT 3.2
Date of last amendment: April 21, 1998
BY-LAWS
OF
THE AES CORPORATION
ARTICLE I
OFFICES
Section 1.01. Registered Office. The registered office shall be at 1013 Centre
Road in the City of Wilmington in the State of Delaware.
Section 1.02. Additional Offices. The Corporation may also have offices and
places of business at such other places, within or without the State of
Delaware, as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01. Time and Place. All meetings of stockholders shall be held at such
time and place within or without the State of Delaware as shall be stated in the
notice of the meeting, or in a duly executed waiver of notice thereof.
Section 2.02. Annual meetings of stockholders shall be held on the first Friday
of June of each year, if not a legal holiday, and if a legal holiday, then on
the next succeeding business day not a legal holiday, or at such other date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. At the annual meeting, the stockholders
shall elect a Board of Directors, and transact any other business as may
properly come before the meeting, notice of which was given in the notice of the
meeting. At each election of directors, every holder of stock entitled to vote
shall have the right to vote, in person or by proxy, the number of shares owned
by him for as many persons as there are directors to be elected and for whose
election he has a right to vote. Directors shall be elected by a plurality of
votes cast at an election.
Section 2.03. The Secretary shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.04. Special meetings of the stockholders, unless otherwise prescribed
by statute or by the Certificate of Incorporation, may be held at such place as
may from time to time be
<PAGE>
designated by the directors and may be called only by the Chairman of the Board,
the President or by resolution adopted by a majority of the entire Board of
Directors, for such purposes as shall be specified in the call.
Section 2.05. Written notice of the annual meeting or any special meeting of
stockholders stating the place, date and hour of the meeting shall be given in
accordance with Section 4.01 to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 2.06. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 2.07. The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, or the officer presiding over the
meeting, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjournment at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with Section 2.01 or 2.05 as the case may be, to each
stockholder of record entitled to vote at the meeting.
Section 2.08. At any meeting at which a quorum is present, the vote of the
holders of a majority of the stock entitled to vote on the subject matter,
present in person or represented by proxy, shall be the act of the stockholders,
unless the subject matter is such that, by express provision of the statutes,
the Certificate of Incorporation or these By-Laws, a different vote is required,
in which case such express provision shall govern and control the decision of
such subject matter. The stockholders present at a duly convened meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 2.09. If a vote is to be taken by ballot, each ballot shall state the
number of shares voted and the name of the stockholder or proxy voting.
Section 2.10. Each meeting of the stockholders, whether annual or special, shall
be presided over by the Chairman of the Board if present, and if he or she is
not present or declines to preside by the President if present. If neither
officer specified in the preceding sentence is present, the meeting shall be
presided over by the person designated in writing by the Chairman of the Board,
or if the Chairman of the Board has made no designation, by the person
designated by the President, or if the President has made no designation, by the
person designated by the Board of Directors. If neither officer specified in the
first sentence of this Section 2.10 is present, and no one designated by the
Chairman of the Board or the President or the Board of Directors is present, the
meeting may elect any stockholder of record who is entitled to vote for
directors, or any person present holding a proxy for such a stockholder, to
preside. The Secretary of the Company (or in his or her absence any Assistant
Secretary) shall be the Secretary of any such meeting; in the absence of the
Secretary and Assistant Secretaries, any person may be elected by the meeting to
act as Secretary of the meeting.
<PAGE>
Section 2.11. Any voting proxy given by a stockholder must be: in writing,
executed by the stockholder, or, in lieu thereof, to the extent permitted by
law, may be transmitted in a telegram, cablegram or other means of electronic
transmission setting forth or submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission was
authorized by the stockholder. A copy, facsimile transmission or other reliable
reproduction of a written or electronically-transmitted proxy authorized by this
Section 2.11 may be substituted for or used in lieu of the original writing or
electronic transmission to the extent permitted by law.
Section 2.12. The directors shall appoint one or more inspectors of election and
of the vote at any time prior to the date of any meeting of stockholders at
which an election is to be held or a vote is to be taken. In the event any
inspector so appointed is absent from such meeting or for any other reason fails
to act as such at the meeting, the person presiding at such meeting pursuant to
these By-Laws may appoint a substitute who shall have all the powers and duties
of such inspector. The inspector or inspectors so appointed shall act at such
meeting, make such reports thereof and take such other action as shall be
provided by law and as may be directed by the person presiding over the meeting.
Each inspector, before entering upon the discharge of his or her duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.
Section 2.13. The directors may, at any time prior to any annual or special
meeting of the stockholders, adopt an order of business for such meeting which
shall be the order of business to be followed at such meeting. The date and time
of the opening and the closing of the polls for each matter upon which the
stockholders will vote at such meeting shall be announced at such meeting by the
person presiding over such meeting.
Section 2.14. At any meeting of stockholders a stock vote shall be taken on any
resolution or other matter presented to the meeting for action if so ordered by
the person presiding over the meeting or on the demand of any stockholder of
record entitled to vote at the meeting or any person present holding a proxy for
such a stockholder. Such order or demand for a stock vote may be made either
before or after a vote has been taken on such resolution or other matter in a
manner other than by stock vote and before or after the result of the vote taken
otherwise than by stock vote has been announced. The result of a stock vote
taken in accordance with this By-Law shall supersede the result of any vote
previously taken in any manner other than by stock vote.
Section 2.15. (A) The proposal of other business to be considered by the
stockholders may be made at an annual meeting of stockholders (1) pursuant to
the Corporation's notice of meeting, (2) by or at the direction of the Board of
Directors or (3) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of the notice provided for in this Section 2.15,
who is entitled to vote thereon at the meeting and who complies with the notice
procedures set forth in this Section 2.15.
(B) For business (other than the nominations of persons for election to the
Board of Directors) to be properly brought before an annual meeting by a
stockholder pursuant to clause (3) of paragraph (A) of this Section 2.15, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a stockholder's notice shall be delivered, either
by personal delivery or by United States mail, postage pre-paid, to the
Secretary not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting provided, however, that in
the event that the date of the annual meeting is more than 30 days before or
more than 60 days after such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the close of business on the 90th
day prior to such annual meeting and not later than the close of business
<PAGE>
on the later of the 60th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made by the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above. Such stockholder's notice shall set
forth (1) a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made and (2) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the proposal
is made (a) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (b) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(C) Only such business shall be conducted at a meeting of stockholders as
shall have been brought before the meeting in accordance with the procedures set
forth in this by-law. Except as otherwise provided by law, the Certificate of
Incorporation or these by-laws, the person presiding over an annual meeting of
stockholders shall have the power and duty to determine whether any business
proposed by any stockholder to be brought before the meeting was made in
accordance with the procedures set forth in this Section 2.15 and, if any
proposed business is not in compliance with this Section 2.15, to declare that
such defective proposal shall be disregarded.
(D) For purposes of this by-law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(E) In addition to the foregoing provisions of this Section 2.15, a
stockholder shall comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with
respect to the matters set forth in this Section 2.15. Nothing in this Section
2.15 shall be deemed to affect any rights of stockholders to request inclusion
of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under
such Act.
ARTICLE III
MATTERS RELATING TO THE BOARD OF DIRECTORS
Directors
Section 3.01. The business of the Corporation shall be managed by its Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute, the Certificate of Incorporation
or these By-Laws directed or required to be exercised or done by the
stockholders.
Section 3.02. The number of directors of the Corporation which shall constitute
the whole Board shall be nine, or such other numbers as may be determined by
written resolution of the Board of Directors. The directors shall be elected at
the annual meeting of the stockholders, except as provided in Section 3.04, and
each director elected shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Directors need
not be stockholders of the Corporation.
<PAGE>
Section 3.03. Any director of the Corporation may resign at any time either by
oral tender of resignation at any meeting of the Board of Directors or by
delivering written notice thereof to the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified with respect thereto the acceptance of such resignation
shall not be necessary to make it effective.
Section 3.04. Any director may be removed for cause, at any time, by the
affirmative vote of the holders of record of a majority of all the shares of
capital stock entitled to vote at a special meeting of the stockholders called
for such purpose. Vacancies in the Board of Directors created by the death,
resignation or removal of directors and newly created directorships resulting
from any increase in the authorized number of directors may be filled only by
the affirmative vote of a majority of the remaining directors. If the directors
remaining in office shall be unable, by majority vote, to fill such vacancy
within 60 days of the occurrence thereof, the Chairman of the Board or the
President may call a special meeting of the stockholders at which such vacancy
shall be filled. Any director so chosen shall hold office until the next annual
election and until his or her successor is duly elected and qualified or until
his or her earlier resignation or removal. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
Meetings of the Board of Directors
Section 3.05. The Board of Directors of the Corporation may hold meetings, both
regular and special, either within or without the State of Delaware.
Section 3.06. The Board of Directors shall meet as soon as practicable after the
annual election of directors, for the purpose of organization and the
transaction of other business including the election of officers. No notice of
such meeting shall be required. Such organization meeting may, however, be held
at any other time or place which shall be specified in a notice given as
hereinafter provided for special meetings of the Board, or in a consent and
waiver of notice thereof signed by all the directors.
Section 3.07. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board. Any business of the Corporation may be transacted at any such
regular meeting.
Section 3.08. Special meetings of the Board of Directors shall be called by the
Secretary, on three days; notice to each director as provided in Article IV,
either on the request of the Chairman of the Board, the President or on the
written request of two directors.
Section 3.09. At all meetings of the Board of Directors, a majority of the
directors then in office shall constitute a quorum for the transaction of
business, and the act of a quorum shall be the act of the Board of Directors,
except as may be otherwise specifically provided by statute, the Certificate of
Incorporation or these By-Laws. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 3.10. Unless otherwise restricted by the Certificate of Incorporation or
these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board or such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or such committee.
<PAGE>
Section 3.11. Members of the Board of Directors or any committee designated by
the Board pursuant to Section 3.12 may participate in a meeting of such Board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at such
meeting.
Committees of Directors
Section 3.12. The Board of Directors may, by resolution passed by the
affirmative vote of a majority of the directors, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation. The Board may by like vote designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in the adopting resolution, shall have and may exercise the powers of
the Board of Directors in the management of the business and affairs of the
Corporation except as limited by the General Corporation Law of the State of
Delaware, and may authorize the seal of the Corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors.
Section 3.13. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
Compensation
Section 3.14. Directors, and members of any committee of the Board of Directors,
shall be entitled to such reasonable compensation for their services as
directors and members of each such committee as shall be fixed from time to time
by resolution of the Board of Directors, and shall also be entitled to
reimbursement for any reasonable expenses incurred in attending such meetings.
Any directors receiving compensation under these provisions shall not be barred
from serving the Corporation in any other capacity and receiving reasonable
compensation for such other services.
ARTICLE IV
NOTICES
Section 4.01. Whenever, under the provisions of the statutes, the Certificate of
Incorporation or these By-Laws, notice e is required to be given to any director
or stockholder, it shall not be construed to mean personal notice, but such
notice may be given in writing, by mail, addressed to such director, or
stockholder, at his or her address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram, cable or facsimile
transmission.
Section 4.02. Whenever any notice is required to be given under the provisions
of the statutes, the Certificate of Incorporation or of these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
such notice. Attendance in person or by proxy of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting and does
so object at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Any director attending a
meeting of the Board of Directors
<PAGE>
without protesting, prior to the meeting or at its commencement, any lack of
notice shall be conclusively deemed to have waived notice if such meeting.
ARTICLE V
OFFICERS
Section 5.01. The Board of Directors at its first meeting after each meeting of
stockholders at which directors are elected, shall elect a Chairman of the
Board, a President, one or more Vice Presidents, a Secretary and a Treasurer,
each of whom shall hold office until the first meeting of the Board after the
next annual meeting of the stockholders and until his or her successor is
elected and qualified. At any time, the Board of Directors may also appoint one
or more Assistant Secretaries, Assistant Treasurers and such other officers and
agents as in its judgment the business of the Corporation may require and who
shall perform such duties as the Board shall from time to time determine. Except
for the Chairman of the Board, no officer of the Corporation need be a member of
the Board of Directors. Two or more offices, except President and Secretary, may
be held by the same person.
Section 5.02. The compensation of all officers and agents of the Corporation
shall be fixed by the Board of Directors except to the extent such power shall
be delegated, by resolution of the Board, to a committee of directors, to the
Chairman of the Board or to the President.
Section 5.03. Any officer or agent of the Corporation may be removed at any
time, either with or without cause, by the Board of Directors in its sole
discretion. Any vacancy occurring in any office of the Corporation may be filled
at any time by the Board of Directors.
The Chairman of the Board
Section 5.04. The Chairman of the Board shall be the Chief Executive Officer of
the Company and shall preside at all meetings of the Board of Directors, and
shall have such other powers and duties as may from time to time be assigned by
the Board of Directors.
The President
Section 5.05. The President shall be the Chief Operating Officer of the
Corporation. Subject to the authority of the Board of Directors, the President
shall have general and active charge, control and supervision of all the
business and affairs of the Corporation. The President shall perform such other
duties as the Board may from time to time prescribe.
The Vice Presidents
Section 5.06. The several Vice Presidents may be designated by such title or
titles and in such order of seniority as the Board of Directors may determine.
They shall perform such duties and exercise such powers as the Board of
Directors or the President may from time to time prescribe.
The Secretary and Assistant Secretaries
Section 5.7. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors;
attend all meetings of the Board of Directors and all meetings of the
stockholders and record the proceedings of all such meetings in a book kept for
that purpose; perform like duties for the standing committees
<PAGE>
when required; keep and account for all books, documents, papers and records of
the Corporation, except those for which some other officer or agent is properly
accountable; and perform such other duties as may be prescribed from time to
time by the Board of Directors or the President. The Secretary shall have
custody of the corporate seal of the Corporation and shall, and any Assistant
Secretary shall, have authority to affix the same to any instrument requiring it
and, when so affixed, it may be attested by the signature of the Secretary or
such Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the Corporation and to attest the
affixing by his or her signature.
Section 5.08. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries, shall perform such duties and exercise such powers as the
Board of Directors, the President or the Secretary may from time to time
prescribe.
The Treasurer and Assistant Treasurers
Section 5.09. The Treasurer shall have the custody of the corporate funds and
securities and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the President, shall render to the President
and to the Board, whenever the President or the Board shall require, an account
of all his or her transactions as Treasurer.
Section 5.10. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers, shall perform such duties and exercise such powers as the
Board of Directors, the President or the Treasurer may from time to time
prescribe.
ARTICLE VI
MATTERS RELATING TO THE STOCK OF THE CORPORATION
Section 6.01. The certificates for shares of the Corporation shall be in such
form as shall be determined by the Board of Directors and shall be numbered
consecutively and entered in the books of the Corporation as they are issued.
Every holder of shares of capital stock of the Corporation shall be entitled to
have a certificate in the form approved by the Board of Directors, signed by the
Chairman of the Board or the President or a Vice President and the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying
the number of such shares owned by him or her.
Section 6.02. Where any such certificate is signed either by a transfer agent or
an assistant transfer agent, or by a transfer clerk acting on behalf of the
Corporation and by a registrar, the signature of any such Chairman of the Board,
President, Vice President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary may be facsimile. In case any such officer who has signed,
or whose facsimile signature has been affixed on, any such certificate shall
cease to be such officer, whether because of resignation, removal or otherwise,
before such certificate has been issued or delivered by the Corporation, such
certificate may nevertheless be issued and delivered by the Corporation with the
same effect as if such officer had not ceased to be such at the date of such
delivery.
Section 6.03. In case any certificate of stock shall be lost, stolen or
destroyed, the Board of Directors, in its discretion, or any officer or officers
thereunto duly authorized by the Board, may authorize the issuance of a
substitute certificate in place of the certificate so lost, stolen or destroyed;
provided, however, that in each such case the applicant for a substitute
certificate shall furnish evidence to the Corporation which the Board of
Directors, or any office or
<PAGE>
officers authorized as aforesaid, determines is satisfactory, of the loss, theft
or destruction of such certificate and of the ownership thereof, and also such
security or indemnity as may be required by the Board.
Section 6.04. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the proper officers of the Corporation or of the transfer agent to issue
a new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 6.05. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof or to express consent to corporate action in writing without
a meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 6.06. The Corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive dividends,
and to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the General Corporation Law of
the State of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Dividends
Section 7.01. Dividends upon the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of capital stock,
subject to the applicable provisions, if any, of the Certificate of
Incorporation.
Section 7.02. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Fiscal Year
Section 7.03. The fiscal year of the Corporation shall be the calendar year
unless otherwise fixed by resolution of the Board of Directors.
<PAGE>
Deposits
Section 7.04. The Board of Directors shall select banks, trust companies, or
other depositories in which all funds of the Corporation not otherwise employed
shall, from time to time, be deposited to the credit of the Corporation. All
checks and drafts on the Corporation's bank accounts and all other instruments
for the payment of money shall be signed by such officer or officers or other
person or persons as shall be thereunto authorized from time to time by the
Board of Directors.
Voting Securities Held by the Corporation
Section 7.05. Unless otherwise ordered by the Board of Directors, the President
shall have full power and authority on behalf of the Corporation to attend and
to act and to vote at any meeting of security holders of other corporations in
which the Corporation may hold securities. At such meeting the President shall
possess and may exercise any and all rights and powers incident to the ownership
of such securities which the Corporation might have possessed and exercised if
it had been present. The Board of Directors may, from time to time, confer like
powers upon any other person or persons.
Section 7.06. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. (A) Any person who was or is a party or is threatened to be made a
party to or was or is involved (as a witness or otherwise) in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than any action or suit by or in the
right of the Corporation to procure a judgment in its favor (a "derivative
action")) by reason of the fact that he or she is or was a director, officer or
employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, shall be indemnified by the Corporation, to
the extent authorized by the laws of the State of Delaware as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such laws permitted prior to such amendment),
against all expenses (including, but not limited to, attorneys' fees, judgments,
fines, penalties and amounts paid in settlement) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action, suit or proceeding. In the event of any derivative action, such persons
shall be indemnified by the Corporation under the same conditions and to the
same extent as specified above, except that no indemnification is permitted in
respect of any claim, issue or matter as to which such persons shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper. The indemnification expressly provided by statute
in a specific case shall not be deemed exclusive of any other rights to which
any person indemnified may be entitled under any lawful agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office, and shall
<PAGE>
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(B) The right to indemnification conferred in this Article VIII is and
shall be a contract right. The right to indemnification conferred in this
Article VIII shall include the right to be paid by the Corporation the expenses
(including attorneys' fees and retainers therefor) reasonably incurred in
connection with any such proceeding in advance of its final disposition, such
advances to be paid by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from a director, officer or employee of
the Corporation requesting such advance or advances from time to time; provided,
however, the payment of such expenses incurred by a director, officer or
employee in his or her capacity as a director, officer or employee in advance of
the final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking by or on behalf of such director, officer or
employee to repay all amounts so advanced if it shall ultimately be determined
that such director, officer or employee is not entitled to be indemnified under
this Article VIII or otherwise.
(C) To obtain indemnification under this Article VIII, an indemnitee shall
submit to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to such person and is
reasonably necessary to determine whether and to what extent the indemnitee is
entitled to indemnification.
(D) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture; trust or other enterprise
including service with respect to employee benefit plans, against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware. To the extent that the Corporation
maintains any policy or policies providing such insurance, each such director,
officer or employee, and each such agent to which rights to indemnification have
been granted as provided in paragraph (E) of this Article VIII, shall be covered
by such policy or policies in accordance with its or their terms to the maximum
extent of the coverage thereunder for any such director, officer, employee or
agent.
(E) The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and rights to be paid by
the Corporation the expenses incurred in connection with any proceeding in
advance of its final disposition, to any agent of the Corporation to the fullest
extent of the provisions of this Article VIII with respect to the
indemnification and advancement of expenses of directors, officers and employees
of the Corporation.
ARTICLE IX
NOMINATION OF DIRECTORS
Section 9.01. Any stockholder of record may nominate one or more persons for
election as director at a meeting only if written notice of such stockholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (a) with respect to an election to be held at an
annual meeting of stockholders, ninety (90) days in advance of such meeting; and
(b) with respect to an election to be held at a special meeting of stockholders
for the election of directors, the close of business on the seventh day
following the earlier of (i) the date on which notice of such meeting is first
given to stockholders and (ii) the date on
<PAGE>
which a public announcement of such meeting is first made. Each such notice
shall include: (1) the name and address of each stockholder of record who
intends to appear in person or by proxy to make the nomination and of the person
or persons to be nominated; (2) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (3) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement .filed pursuant to the proxy rules of the
Securities and Exchange Commission; and (4) the consent of each nominee to serve
as a director of the Corporation if so elected. The person presiding at the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure.
ARTICLE X
AMENDMENTS
Section 10.01. These By-Laws may be amended or repealed by the affirmative vote
of a majority of the stockholders entitled to vote thereon or a majority of the
directors then in office at any regular meeting of the stockholders or of the
Board of Directors, respectively, or at any special meeting of the stockholders
or of the Board of Directors, respectively, if notice of such proposed
alteration or repeal be contained in the notice of such meeting. The
stockholders may determine by majority vote that any action taken by them with
respect to adoption, amendment or repeal of any part of these By-Laws shall not
be subject to subsequent amendment or repeal by the Board of Directors, provided
that any such determination shall be set forth in the appropriate place in the
text of these By-Laws.
================================================================================
THE AES CORPORATION
as the Company
and
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
-----------------------------------
Junior Subordinated Indenture
Dated as of August 10, 1998
-----------------------------------
================================================================================
<PAGE>
Page
TABLE OF CONTENTS*
RECITALS OF THE COMPANY .......................................................1
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.....................................................1
SECTION 1.2. Other Definitions...............................................9
SECTION 1.3. Incorporation by Reference of Trust Indenture Act..............10
SECTION 1.4. Rules of Construction..........................................10
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating................................................11
SECTION 2.2. Execution and Authentication...................................11
SECTION 2.3. Amount Unlimited; Issuable in Series...........................13
SECTION 2.4. Denomination and Date of Securities; Payments of Interest......16
SECTION 2.5. Registrar and Paying Agent; Agents Generally...................16
SECTION 2.6. Paying Agent to Hold Money in Trust............................17
SECTION 2.7. Transfer and Exchange..........................................18
SECTION 2.8. Replacement Securities.........................................21
SECTION 2.9. Outstanding Securities.........................................22
SECTION 2.10. Temporary Securities...........................................23
SECTION 2.11. Cancellation...................................................23
SECTION 2.12. CUSIP Numbers..................................................24
SECTION 2.13. Defaulted Interest.............................................24
SECTION 2.14. Series May Include Tranches....................................24
ARTICLE 3
REDEMPTION
SECTION 3.1. Applicability of Article.......................................25
SECTION 3.2. Notice of Redemption; Partial Redemptions......................25
SECTION 3.3. Payment of Securities Called for Redemption....................27
*Note: The Table of Contents shall not for any purposes be deemed to
be a part of the Indenture.
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<PAGE>
SECTION 3.4. Exclusion of Certain Securities from
Eligibility for Selection for Redemption.....................28
SECTION 3.5. Mandatory and Optional Sinking Funds...........................28
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities..........................................31
SECTION 4.2. Maintenance of Office or Agency................................32
SECTION 4.3. Securityholders' Lists.........................................33
SECTION 4.4. Certificate to Trustee.........................................34
SECTION 4.5. Reports by the Company.........................................34
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc....................................34
SECTION 5.2. Successor Substituted..........................................35
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.1. Events of Default..............................................35
SECTION 6.2. Acceleration...................................................36
SECTION 6.3. Other Remedies.................................................38
SECTION 6.4. Waiver of Past Defaults........................................38
SECTION 6.5. Control by Majority............................................39
SECTION 6.6. Limitation on Suits............................................39
SECTION 6.7. Rights of Holders to Receive Payment...........................40
SECTION 6.8. Collection Suit by Trustee.....................................40
SECTION 6.9. Trustee May File Proofs of Claim...............................40
SECTION 6.10. Application of Proceeds........................................41
SECTION 6.11. Restoration of Rights and Remedies.............................42
SECTION 6.12. Undertaking for Costs..........................................42
SECTION 6.13. Rights and Remedies Cumulative.................................42
SECTION 6.14. Delay or Omission Not Waiver...................................43
ARTICLE 7
TRUSTEE
SECTION 7.1. General........................................................43
SECTION 7.2. Certain Rights of Trustee......................................43
SECTION 7.3. Individual Rights of Trustee...................................45
SECTION 7.4. Trustee's Disclaimer...........................................46
SECTION 7.5. Notice of Default..............................................46
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<PAGE>
SECTION 7.6. Reports by Trustee to Holders..................................46
SECTION 7.7. Compensation and Indemnity.....................................46
SECTION 7.8. Replacement of Trustee.........................................47
SECTION 7.9. Successor Trustee by Merger, Etc...............................49
SECTION 7.10. Eligibility....................................................49
SECTION 7.11. Money Held in Trust............................................49
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 8.1. Satisfaction and Discharge of Indenture........................49
SECTION 8.2. Application by Trustee of Funds Deposited
for Payment of Securities....................................51
SECTION 8.3. Repayment of Moneys Held by Paying Agent.......................51
SECTION 8.4. Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years................................51
SECTION 8.5. Defeasance and Discharge of Indenture..........................51
SECTION 8.6. Defeasance of Certain Obligations..............................53
SECTION 8.7. Reinstatement..................................................55
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders.....................................55
SECTION 9.2. With Consent of Holders........................................56
SECTION 9.3. Revocation and Effect of Consent...............................57
SECTION 9.4. Notation on or Exchange of Securities..........................58
SECTION 9.5. Trustee to Sign Amendments, Etc................................58
SECTION 9.6. Conformity with Trust Indenture Act............................59
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act of 1939....................................59
SECTION 10.2. Notices........................................................59
SECTION 10.3. Certificate and Opinion as to Conditions Precedent.............60
SECTION 10.4. Statements Required in Certificate or Opinion..................61
SECTION 10.5. Evidence of Ownership..........................................61
SECTION 10.6. Rules by Trustee, Paying Agent or Registrar....................62
SECTION 10.7. Payment Date Other Than a Business Day.........................62
SECTION 10.8. Governing Law..................................................62
SECTION 10.9. No Adverse Interpretation of Other Agreements..................63
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<PAGE>
SECTION 10.10. Successors.....................................................63
SECTION 10.11. Duplicate Originals............................................63
SECTION 10.12. Separability...................................................63
SECTION 10.13. Table of Contents, Headings, Etc...............................63
SECTION 10.14. Incorporators, Stockholders, Officers and
Directors of Company Exempt from
Individual Liability......................................63
SECTION 10.15. Judgment Currency..............................................63
ARTICLE 11
SUBORDINATION OF SECURITIES
SECTION 11.1. Agreement to Subordinate.......................................64
SECTION 11.2. Payments to Securityholders....................................64
SECTION 11.3. Subrogation of Securities......................................67
SECTION 11.4. Authorization by Securityholders...............................68
SECTION 11.5. Notice to Trustee..............................................68
SECTION 11.6. Trustee's Relation to Senior and
Subordinated Debt............................................70
SECTION 11.7. No Impairment of Subordination.................................70
SIGNATURES ..................................................................71
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<PAGE>
INDENTURE, dated as of August 10, 1998, between The AES Corporation, a
Delaware corporation, as the Company, and The First National Bank of Chicago, a
national association, as Trustee.
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the issue from time to time of its
debentures, notes or other evidences of indebtedness to be issued in one or more
series (the "Securities") up to such principal amount or amounts as may from
time to time be authorized in accordance with the terms of this Indenture and to
provide, among other things, for the authentication, delivery and administration
thereof, the Company has duly authorized the execution and delivery of this
Indenture; and
WHEREAS, all things necessary to make this Indenture a valid indenture and
agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the
holders thereof, the Company and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective holders from time to time of
the Securities or of any and all series thereof and of the coupons, if any,
appertaining thereto as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with") when used with respect to any Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
<PAGE>
"Agent" means any Registrar, Paying Agent, transfer agent or Authenticating
Agent.
"Authorized Newspaper" means a newspaper (which, in the case of The City of
New York, will, if practicable, be The Wall Street Journal (Eastern Edition) and
in the case of London, will, if practicable, be the Financial Times (London
Edition)) and published in an official language of the country of publication
customarily published at least once a day for at least five days in each
calendar week and of general circulation in The City of New York or London, as
applicable. If it shall be impractical in the opinion of the Trustee to make any
publication of any notice required hereby in an Authorized Newspaper, any
publication or other notice in lieu thereof which is made or given with the
approval of the Trustee shall constitute a sufficient publication of such
notice.
"Bank Credit Agreement" means the Credit Agreement dated as of August 2,
1996 among the Company, the Banks named on the signature pages thereof and
Morgan Guaranty Trust Company of New York, as such Agreement has been and may be
amended, restated, supplemented or otherwise modified from time to time, and
includes any agreement extending the maturity of, or restructuring (including,
but not limited to, the inclusion of additional borrowers thereunder that are
Subsidiaries of the Company and whose obligations are guaranteed by the Company
thereunder) all or any portion of, the Debt under such Agreement or any
successor agreements and includes any agreement with one or more banks or other
lending institutions refinancing all or any portion of the Debt under such
Agreement or any successor agreements.
"Board Resolution" means one or more resolutions of the board of directors
of the Company or any authorized committee thereof, certified by the secretary
or an assistant secretary to have been duly adopted and to be in full force and
effect on the date of certification, and delivered to the Trustee.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York, with respect
to any Security the interest on which is based on the offered quotations in the
interbank Eurodollar market for dollar deposits in London, or with respect to
Securities denominated in a specified currency other than United States dollars,
in the principal financial center of the country of the specified currency.
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<PAGE>
"Capitalized Lease" is defined to mean, as applied to any Person, any lease
of any property of which the discounted present value of the rental obligations
of such Person as lessee, in conformity with GAAP, is required to be capitalized
on the balance sheet of such Person; and "Capitalized Lease Obligation" is
defined to mean the rental obligations, as aforesaid, under such lease.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company to any Person or group (as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) of Persons, (ii) a Person or
group (as so defined) of Persons (other than management and directors of the
Company on the date of this Indenture or their Affiliates) shall have become the
beneficial owner of more than 35% of the outstanding voting stock of the
Company, or (iii) during any one-year period, individuals who at the beginning
of such period constitute the Board of Directors (together with any new director
whose election or nomination was approved by a majority of the directors then in
office who were either directors at the beginning of such period or who were
previously so approved) cease to constitute a majority of the Board of
Directors.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article 5 of this Indenture
and thereafter means the successor.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at One First National Plaza, Suite 1026, Chicago, Illinois 60670-0126
Attention: Corporate Trust Services Division.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in cur-
-3-
<PAGE>
rency values to or under which such Person or any of its
Subsidiaries is a party or a beneficiary on the date hereof or becomes a party
or a beneficiary thereafter.
"Debt" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or bankers' acceptance or other similar instruments (or
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, except Trade
Payables, (v) all obligations of such Person as lessee under Capitalized Leases,
(vi) all Debt of others secured by a Lien on any asset of such Person, whether
or not such Debt is assumed by such Person; provided that, for purposes of
determining the amount of any Debt of the type described in this clause, if
recourse with respect to such Debt is limited to such asset, the amount of such
Debt shall be limited to the lesser of the fair market value of such asset or
the amount of such Debt, (vii) all Debt of others Guaranteed by such Person to
the extent such Debt is Guaranteed by such Person, (viii) all redeemable stock
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends and (ix) to the extent not otherwise included
in this definition, all obligations of such Person under Currency Agreements and
Interest Rate Agreements.
"Default" means any Event of Default as defined in Section 6.1 and any
event that is, or after notice or passage of time or both would be, an Event of
Default.
"Depositary" means, with respect to the Securities of any series issuable
or issued in the form of one or more Registered Global Securities, the Person
designated as Depositary by the Company pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
such series shall mean the Depositary with respect to the Registered Global
Securities of that series.
"Designated Senior and Subordinated Debt" means (i) Debt under the Bank
Credit Agreement and (ii) Debt constituting Senior and Subordinated Debt which,
at the time of its determination, (A) has an aggregate principal amount of at
least $30 million and (B) is specifically designated in the instrument
-4-
<PAGE>
evidencing such Senior and Subordinated Debt as "Designated Senior and
Subordinated Debt" by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the U.S. as in
effect as of the Closing Date applied on a basis consistent with the principles,
methods, procedures and practices employed in the preparation of the Company's
audited financial statements, including, without limitation, those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt or other obligation of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keepwell, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part); provided
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Holder" or "Securityholder" means the registered holder of any Security
with respect to Registered Securities and the bearer of any Unregistered
Security or any coupon appertaining thereto, as the case may be.
"Indenture" means this Indenture as originally executed and delivered or as
it may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture and shall include the forms and terms of the
Securities of each series established as contemplated pursuant to Sections 2.1
and 2.3.
-5-
<PAGE>
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement designed to protect such Person or any of its Subsidiaries
against fluctuations in interest rates to or under which such Person or any of
its Subsidiaries is a party or a beneficiary on the date hereof or becomes a
party or a beneficiary thereafter.
"Lien" means, with respect to any Property, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Indenture, the Company shall be deemed to own
subject to a Lien any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Material Subsidiary" of a Person is defined to mean, as of any date, any
Subsidiary that would constitute a "significant subsidiary" within the meaning
of Article 1 of Regulation S-X of the Securities Act of 1933, as amended.
"Officer" means, with respect to the Company, the chairman of the board of
directors, the president or chief executive officer, any vice president, the
chief financial officer, the treasurer or any assistant treasurer, or the
secretary or any assistant secretary.
"Officers' Certificate" means a certificate signed in the name of the
Company (i) by the chairman of the board of directors, the president or chief
executive officer or a vice president and (ii) by the chief financial officer,
the treasurer or any assistant treasurer, or the secretary or any assistant
secretary, complying with Section 10.4 and delivered to the Trustee. Each such
certificate shall comply with Section 314 of the Trust Indenture Act and include
(except as otherwise expressly provided in this Indenture) the statements
provided in Section 10.4.
"Opinion of Counsel" means a written opinion signed by legal counsel, who
may be an employee of or counsel to the Company, satisfactory to the Trustee and
complying with Section 10.4. Each such opinion shall comply with Section 314 of
the Trust Indenture Act and include the statements provided in Section 10.4, if
and to the extent required thereby.
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<PAGE>
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of authentication of such Security or (b) the date of
any Security (or portion thereof) for which such Security was issued (directly
or indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to Section 6.2.
"Periodic Offering" means an offering of Securities of a series from time
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest, if any, thereon, the stated maturity or
maturities thereof and the redemption provisions, if any, with respect thereto,
are to be determined by the Company or its agents upon the issuance of such
Securities.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Principal" of a Security means the principal amount of, and, unless the
context indicates otherwise, includes any premium payable on, the Security.
"Registered Global Security" means a Security evidencing all or a part of a
series of Registered Securities, issued to the Depositary for such series in
accordance with Section 2.2, and bearing the legend prescribed in Section 2.2.
"Registered Security" means any Security registered on the Security
Register (as defined in Section 2.5).
"Responsible Officer" means, when used with respect to the Trustee, any
senior trust officer, any vice president, any trust officer, any assistant trust
officer, or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Securities" means any of the securities, as defined in the first paragraph
of the recitals hereof, that are authenticated and delivered under this
Indenture and, unless the context indicates otherwise, shall include any coupon
appertaining thereto.
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<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest on all Debt of the Company whether created, incurred or assumed
before, on or after the date of this Indenture; provided that such Senior and
Subordinated Debt shall not include (i) Debt of the Company to any affiliate,
(ii) Debt of the Company that, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, was without recourse, (iii) any
other Debt of the Company which by the terms of the instrument creating or
evidencing the same is specifically designated as not being senior in right of
payment to the Securities, and in particular the Securities shall rank pari
passu with all other debt securities and guarantees issued to any trust,
partnership or other entity affiliated with the Company which is a financing
vehicle of the Company in connection with an issuance of preferred securities by
such financing entity and (iv) redeemable stock of the Company.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which a majority of the capital stock or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article 7 and thereafter means such successor.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended (15
U.S. Code ss. 77aaa-77bbbb), as it may be amended from time to time.
"Unregistered Security" means any Security other than a Registered
Security.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or
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<PAGE>
(ii) obligations of an agency or instrumentality of the United States of America
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, and shall also include a depository
receipt issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"Yield to Maturity" means, as the context may require, the yield to
maturity (i) on a series of Securities or (ii) if the Securities of a series are
issuable from time to time, on a Security of such series, calculated at the time
of issuance of such series in the case of clause (i) or at the time of issuance
of such Security of such series in the case of clause (ii), or, if applicable,
at the most recent redetermination of interest on such series or on such
Security, and calculated in accordance with the constant interest method or such
other accepted financial practice as is specified in the terms of such Security.
SECTION 1.2. Other Definitions. Each of the following terms is defined in
the section set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Authenticating Agent 2.2
cash transaction 7.3
Dollars 4.2
Event of Default 6.1
Judgment Currency 10.15
mandatory sinking fund payment 3.5
optional sinking fund payment 3.5
Paying Agent 2.5
Payment Blockage Period 11.2
record date 2.4
Registrar 2.5
Required Currency 10.15
Security Register 2.5
self-liquidating paper 7.3
sinking fund payment date 3.5
tranche 2.14
</TABLE>
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<PAGE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the Trust Indenture Act, the provision
is incorporated by reference in and made a part of this Indenture. The following
terms used in this Indenture that are defined by the Trust Indenture Act have
the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder or a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by reference in the Trust Indenture Act to another
statute or defined by a rule of the Commission and not otherwise defined herein
have the meanings assigned to them therein.
SECTION 1.4. Rules of Construction. Unless the context otherwise requires:
(i) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(ii) words in the singular include the plural, and words in the plural
include the singular;
(iii) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision;
(iv) all references to Sections or Articles refer to Sections or Articles
of this Indenture unless otherwise indicated; and
(v) use of masculine, feminine or neuter pronouns should not be deemed a
limitation, and the use of any such pronouns should be construed to include,
where appropriate, the other pronouns.
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ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating. The Securities of each series shall be
substantially in such form or forms (not inconsistent with this Indenture) as
shall be established by or pursuant to one or more Board Resolutions or in one
or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have imprinted or otherwise reproduced
thereon such legend or legends or endorsements, not inconsistent with the
provisions of this Indenture, as may be required to comply with any law, or with
any rules of any securities exchange or usage, all as may be determined by the
officers executing such Securities as evidenced by their execution of the
Securities. Unless otherwise so established, Unregistered Securities shall have
coupons attached.
SECTION 2.2. Execution and Authentication. Two Officers shall execute the
Securities (other than coupons) for the Company by facsimile or manual signature
in the name and on behalf of the Company. If an Officer whose signature is on a
Security no longer holds that office at the time the Security is authenticated,
the Security shall nevertheless be valid.
The Trustee, at the expense of the Company, may appoint an authenticating
agent (the "Authenticating Agent") to authenticate Securities (other than
coupons). The Authenticating Agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such Authenticating Agent.
A Security (other than coupons) shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series having attached
thereto appropriate coupons, if any, executed by the Company to the Trustee for
authentication together with the applicable documents referred to below in this
Section, and the Trustee shall thereupon authenticate and deliver such
Securities to or upon the written order of the Company. In authenticating any
Securities of a series, the
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Trustee shall be entitled to receive prior to the first authentication of any
Securities of such series, and (subject to Article 7) shall be fully protected
in relying upon, unless and until such documents have been superseded or
revoked:
(1) any Board Resolution and/or executed supplemental indenture referred to
in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the
Securities of that series were established;
(2) an Officers' Certificate setting forth the form or forms and terms of
the Securities, stating that the form or forms and terms of the Securities of
such series have been, or will be when established in accordance with such
procedures as shall be referred to therein, established in compliance with
this Indenture; and
(3) an Opinion of Counsel substantially to the effect that the form or
forms and terms of the Securities of such series have been, or will be when
established in accordance with such procedures as shall be referred to
therein, established in compliance with this Indenture and that the
supplemental indenture, to the extent applicable, and Securities have been
duly authorized and, if executed and authenticated in accordance with the
provisions of the Indenture and delivered to and duly paid for by the
purchasers thereof on the date of such opinion, would be entitled to the
benefits of the Indenture and would be valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws affecting creditors' rights generally,
general principles of equity, and such other matters as shall be specified
therein.
If the Company shall establish pursuant to Section 2.3 that the Securities
of a series or a portion thereof are to be issued in the form of one or more
Registered Global Securities, then the Company shall execute and the Trustee
shall authenticate and deliver one or more Registered Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series issued in such form and
not yet cancelled, (ii) shall be registered in the name of the Depositary for
such Registered Global Security or Securities or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or its custodian or
pursuant to such Depositary's instructions and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Securities in definitive registered form,
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this Security may not be transferred except as a whole by the Depositary to the
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
SECTION 2.3. Amount Unlimited; Issuable in Series. The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series and shall be
subordinated to the Senior and Subordinated Debt pursuant to the provisions of
Article 11 hereof. There shall be established in or pursuant to Board Resolution
or one or more indentures supplemental hereto, prior to the initial issuance of
Securities of any series, subject to the last sentence of this Section 2.3,
(1) the designation of the Securities of the series, which shall
distinguish the Securities of the series from the Securities of all other
series;
(2) any limit upon the aggregate principal amount of the Securities of the
series that may be authenticated and delivered under this Indenture and any
limitation on the ability of the Company to increase such aggregate principal
amount after the initial issuance of the Securities of that series (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, or upon redemption of, other Securities of the
series pursuant hereto);
(3) the date or dates on which the principal of the Securities of the
series is payable (which date or dates may be fixed or extendible);
(4) the rate or rates (which may be fixed or variable) per annum at which
the Securities of the series shall bear interest, if any, the date or dates
from which such interest shall accrue, on which such interest shall be payable
and (in the case of Registered Securities) on which a record shall be taken
for the determination of Holders to whom interest is payable and/or the method
by which such rate or rates or date or dates shall be determined;
(5) if other than as provided in Section 4.2, the place or places where the
principal of and any interest on Securities of the series shall be payable,
any Registered Securities of the series may be surrendered for exchange,
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notices, demands to or upon the Company in respect of the Securities of the
series and this Indenture may be served and notice to Holders may be
published;
(6) the right, if any, of the Company to redeem Securities of the series,
in whole or in part, at its option and the period or periods within which, the
price or prices at which and any terms and conditions upon which Securities of
the series may be so redeemed, pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any mandatory redemption, sinking fund or
analogous provisions or at the option of a Holder thereof and the price or
prices at which and the period or periods within which and any of the terms
and conditions upon which Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof;
(10) if other than the coin or currency in which the Securities of the
series are denominated, the coin or currency in which payment of the principal
of or interest on the Securities of the series shall be payable or if the
amount of payments of principal of and/or interest on the Securities of the
series may be determined with reference to an index based on a coin or
currency other than that in which the Securities of the series are
denominated, the manner in which such amounts shall be determined;
(11) if other than the currency of the United States of America, the
currency or currencies, including composite currencies, in which payment of
the Principal of and interest on the Securities of the series shall be
payable, and the manner in which any such currencies shall be valued against
other currencies in which any other Securities shall be payable;
(12) whether the Securities of the series or any portion thereof will be
issuable as Registered Securities (and if so, whether such Securities will be
issuable as
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Registered Global Securities) or Unregistered Securities (with or without
coupons), or any combination of the foregoing, any restrictions applicable to
the offer, sale or delivery of Unregistered Securities or the payment of
interest thereon and, if other than as provided herein, the terms upon which
Unregistered Securities of any series may be exchanged for Registered
Securities of such series and vice versa;
(13) whether and under what circumstances the Company will pay additional
amounts on the Securities of the series held by a person who is not a U.S.
person in respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Company will have the option to redeem such
Securities rather than pay such additional amounts;
(14) if the Securities of the series are to be issuable in definitive form
(whether upon original issue or upon exchange of a temporary Security of such
series) only upon receipt of certain certificates or other documents or
satisfaction of other conditions, the form and terms of such certificates,
documents or conditions;
(15) any trustees, depositaries, authenticating or paying agents, transfer
agents or the registrar or any other agents with respect to the Securities of
the series;
(16) provisions, if any, for the defeasance of the Securities of the series
(including provisions permitting defeasance of less than all Securities of the
series), which provisions may be in addition to, in substitution for, or in
modification of (or any combination of the foregoing) the provisions of
Article 8;
(17) if the Securities of the series are issuable in whole or in part as
one or more Registered Global Securities, the identity of the Depositary for
such Registered Global Security or Securities;
(18) any other events of default or covenants with respect to the
Securities of the series; and
(19) any other terms of the Securities of the series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series and coupons, if any, appertaining thereto
shall be substantially identical, except in the case of Registered Securities as
to date and denomina-
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tion, except in the case of any Periodic Offering and except as may otherwise be
provided by or pursuant to the Board Resolution referred to above or as set
forth in any such indenture supplemental hereto. All Securities of any one
series need not be issued at the same time and may be issued from time to time,
consistent with the terms of this Indenture, if so provided by or pursuant to
such Board Resolution or in any such indenture supplemental hereto and any forms
and terms of Securities to be issued from time to time may be completed and
established from time to time prior to the issuance thereof by procedures
described in such Board Resolution or supplemental indenture.
SECTION 2.4. Denomination and Date of Securities; Payments of Interest. The
Securities of each series shall be issuable as Registered Securities or
Unregistered Securities in denominations established as contemplated by Section
2.3 or, if not so established with respect to Securities of any series, in
denominations of $1,000 and any integral multiple thereof. The Securities of
each series shall be numbered, lettered or otherwise distinguished in such
manner or in accordance with such plan as the Officers of the Company executing
the same may determine, as evidenced by their execution thereof.
Each Security shall be dated the date of its authentication. The Securities
of each series shall bear interest, if any, from the date, and such interest and
shall be payable on the dates, established as contemplated by Section 2.3.
The person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the record date and prior to such interest payment date,
except if and to the extent the Company shall default in the payment of the
interest due on such interest payment date for such series, in which case the
provisions of Section 2.13 shall apply. The term "record date" as used with
respect to any interest payment date (except a date for payment of defaulted
interest) for the Securities of any series shall mean the date specified as such
in the terms of the Registered Securities of such series established as
contemplated by Section 2.3, or, if no such date is so established, the
fifteenth day next preceding such interest payment date, whether or not such
record date is a Business Day.
SECTION 2.5. Registrar and Paying Agent; Agents Generally. The Company
shall maintain an office or agency where Securities may be presented for
registration, registra-
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tion of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"), which shall be in
the Borough of Manhattan, The City of New York. The Company shall cause the
Registrar to keep a register of the Registered Securities and of their
registration, transfer and exchange (the "Security Register"). The Company may
have one or more additional Paying Agents or transfer agents with respect to any
series.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture and the Trust Indenture Act that relate to such Agent. The
Company shall give prompt written notice to the Trustee of the name and address
of any Agent and any change in the name or address of an Agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such.
The Company may remove any Agent upon written notice to such Agent and the
Trustee; provided that no such removal shall become effective until (i) the
acceptance of an appointment by a successor Agent to such Agent as evidenced by
an appropriate agency agreement entered into by the Company and such successor
Agent and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company or any affiliate of the
Company may act as Paying Agent or Registrar; provided that neither the Company
nor an affiliate of the Company shall act as Paying Agent in connection with the
defeasance of the Securities or the discharge of this Indenture under Article 8.
The Company initially appoints the Trustee as Registrar, Paying Agent and
Authenticating Agent. If, at any time, the Trustee is not the Registrar, the
Registrar shall make available to the Trustee ten days prior to each interest
payment date and at such other times as the Trustee may reasonably request the
names and addresses of the Holders as they appear in the Security Register.
SECTION 2.6. Paying Agent to Hold Money in Trust. Not later than 10:00 a.m.
New York City time on each due date of any Principal or interest on any
Securities, the Company shall deposit with the Paying Agent money in immediately
available funds sufficient to pay such Principal or interest. The Company shall
require each Paying Agent other than the Trustee to agree in writing that such
Paying Agent shall hold in trust for the benefit of the Holders of such
Securities or the Trustee all money held by the Paying Agent for the payment of
Principal of and interest on such Securities and shall promptly notify the
Trustee of any default by the Company in making any
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such payment. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed, and the
Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. Upon doing so,
the Paying Agent shall have no further liability for the money so paid over to
the Trustee. If the Company or any affiliate of the Company acts as Paying
Agent, it will, on or before each due date of any Principal of or interest on
any Securities, segregate and hold in a separate trust fund for the benefit of
the Holders thereof a sum of money sufficient to pay such Principal or interest
so becoming due until such sum of money shall be paid to such Holders or
otherwise disposed of as provided in this Indenture, and will promptly notify
the Trustee in writing of its action or failure to act as required by this
Section.
SECTION 2.7. Transfer and Exchange. Unregistered Securities (except for any
temporary global Unregistered Securities) and coupons (except for coupons
attached to any temporary global Unregistered Securities) shall be transferable
by delivery.
At the option of the Holder thereof, Registered Securities of any series
(other than a Registered Global Security, except as set forth below) may be
exchanged for a Registered Security or Registered Securities of such series and
tenor having authorized denominations and an equal aggregate principal amount,
upon surrender of such Registered Securities to be exchanged at the agency of
the Company that shall be maintained for such purpose in accordance with Section
2.5 and upon payment, if the Company shall so require, of the charges
hereinafter provided. If the Securities of any series are issued in both
registered and unregistered form, except as otherwise established pursuant to
Section 2.3, at the option of the Holder thereof, Unregistered Securities of any
series may be exchanged for Registered Securities of such series and tenor
having authorized denominations and an equal aggregate principal amount, upon
surrender of such Unregistered Securities to be exchanged at the agency of the
Company that shall be maintained for such purpose in accordance with Section
4.2, with, in the case of Unregistered Securities that have coupons attached,
all unmatured coupons and all matured coupons in default thereto appertaining,
and upon payment, if the Company shall so require, of the charges hereinafter
provided. At the option of the Holder thereof, if Unregistered Securities of any
series, maturity date, interest rate and original issue date are issued in more
than one authorized denomination, except as otherwise established pursuant to
Section 2.3, such Unregistered Securi-
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ties may be exchanged for Unregistered Securities of such series and tenor
having authorized denominations and an equal aggregate principal amount, upon
surrender of such Unregistered Securities to be exchanged at the agency of the
Company that shall be maintained for such purpose in accordance with Section
4.2, with, in the case of Unregistered Securities that have coupons attached,
all unmatured coupons and all matured coupons in default thereto appertaining,
and upon payment, if the Company shall so require, of the charges hereinafter
provided. Registered Securities of any series may not be exchanged for
Unregistered Securities of such series. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Registered Securities presented for registration of transfer, exchange,
redemption or payment shall be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee duly executed by, the holder or his attorney duly authorized in
writing.
The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities. No service charge shall be made for any
such transaction.
Notwithstanding any other provision of this Section 2.7, unless and until
it is exchanged in whole or in part for Securities in definitive registered
form, a Registered Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor Depositary.
If at any time the Depositary for any Registered Global Securities of any
series notifies the Company that it is unwilling or unable to continue as
Depositary for such Registered Global Securities or if at any time the
Depositary for such Registered Global Securities shall no longer be eligible
under applicable law, the Company shall appoint a successor Depositary eligible
under applicable law with respect to such Registered Global Securities. If a
successor Depositary eligible under applicable law for such Registered Global
Securities is not appointed by the Company within 90 days after the Com-
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pany receives such notice or becomes aware of such ineligibility, the Company
will execute, and the Trustee, upon receipt of the Company's order for the
authentication and delivery of definitive Registered Securities of such series
and tenor, will authenticate and deliver Registered Securities of such series
and tenor, in any authorized denominations, in an aggregate principal amount
equal to the principal amount of such Registered Global Securities, in exchange
for such Registered Global Securities.
The Company may at any time and in its sole discretion determine that any
Registered Global Securities of any series shall no longer be maintained in
global form. In such event the Company will execute, and the Trustee, upon
receipt of the Company's order for the authentication and delivery of definitive
Registered Securities of such series and tenor, will authenticate and deliver,
Registered Securities of such series and tenor in any authorized denominations,
in an aggregate principal amount equal to the principal amount of such
Registered Global Securities, in exchange for such Registered Global Securities.
Any time the Registered Securities of any series are not in the form of
Registered Global Securities pursuant to the preceding two paragraphs, the
Company agrees to supply the Trustee with a reasonable supply of certificated
Registered Securities without the legend required by Section 2.2 and the Trustee
agrees to hold such Registered Securities in safekeeping until authenticated and
delivered pursuant to the terms of this Indenture.
If established by the Company pursuant to Section 2.3 with respect to any
Registered Global Security, the Depositary for such Registered Global Security
may surrender such Registered Global Security in exchange in whole or in part
for Registered Securities of the same series and tenor in definitive registered
form on such terms as are acceptable to the Company and such Depositary.
Thereupon, the Company shall execute, and the Trustee shall authenticate and
deliver, without service charge,
(i) to the Person specified by such Depositary new Registered Securities of
the same series and tenor, of any authorized denominations as requested by
such Person, in an aggregate principal amount equal to and in exchange for
such Person's beneficial interest in the Registered Global Security; and
(ii) to such Depositary a new Registered Global Security in a denomination
equal to the difference, if any,
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between the principal amount of the surrendered Registered Global Security and
the aggregate principal amount of Registered Securities authenticated and
delivered pursuant to clause (i) above.
Registered Securities issued in exchange for a Registered Global Security
pursuant to this Section 2.7 shall be registered in such names and in such
authorized denominations as the Depositary for such Registered Global Security,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee or an agent of the Company or the Trustee. The
Trustee or such agent shall deliver such Securities to or as directed by the
Persons in whose names such Securities are so registered.
All Securities issued upon any transfer or exchange of Securities shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Notwithstanding anything herein or in the forms or terms of any Securities
to the contrary, none of the Company, the Trustee or any agent of the Company or
the Trustee shall be required to exchange any Unregistered Security for a
Registered Security if such exchange would result in adverse Federal income tax
consequences to the Company (such as, for example, the inability of the Company
to deduct from its income, as computed for Federal income tax purposes, the
interest payable on the Unregistered Securities) under then applicable United
States Federal income tax laws. The Trustee and any such agent shall be entitled
to rely on an Officers' Certificate or an Opinion of Counsel in determining such
result.
The Registrar shall not be required (i) to issue, authenticate, register
the transfer of or exchange Securities of any series for a period of 15 days
before the day of mailing of a notice of such Securities to be redeemed ending
at the close of business on the day of such mailing or (ii) to register the
transfer of or exchange any Security selected for redemption in whole or in part
except the unredeemed portion of Securities redeemed in part.
SECTION 2.8. Replacement Securities. If a defaced or mutilated Security of
any series is surrendered to the Trustee or if a Holder claims that its Security
of any series has been lost, destroyed or wrongfully taken, the Company shall
issue and the Trustee shall authenticate a replacement Security of such series
and tenor and principal amount bearing a number not contemporaneously
outstanding. If required by the Trustee
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or the Company, an indemnity bond must be furnished that is sufficient in the
judgment of both the Trustee and the Company to protect the Company, the Trustee
and any Agent from any loss that any of them may suffer if a Security is
replaced. The Company may charge such Holder for its expenses and the expenses
of the Trustee (including without limitation attorneys' fees and expenses) in
replacing a Security. In case any such mutilated, defaced, lost, destroyed or
wrongfully taken Security has become or is about to become due and payable, the
Company in its discretion may pay such Security instead of issuing a new
Security in replacement thereof.
Every replacement Security is an additional obligation of the Company and
shall be entitled to the benefits of this Indenture.
To the extent permitted by law, the foregoing provisions of this Section
are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Securities.
SECTION 2.9. Outstanding Securities. Securities outstanding at any time are
all Securities that have been authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this Section as not outstanding.
If a Security is replaced pursuant to Section 2.8, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a holder in due
course.
If the Paying Agent (other than the Company or an affiliate of the Company)
holds on the maturity date or any redemption date or date for repurchase of the
Securities money sufficient to pay Securities payable or to be redeemed or
repurchased on that date, then on and after that date such Securities cease to
be outstanding and interest on them shall cease to accrue.
A Security does not cease to be outstanding because the Company or one of
its affiliates holds such Security, provided, however, that, in determining
whether the Holders of the requisite principal amount of the outstanding
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or any affiliate of
the Company shall be disregarded and deemed not to be outstanding, except that,
in determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver,
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only Securities as to which a Responsible Officer of the Trustee has received
written notice to be so owned shall be so disregarded. Any Securities so owned
which are pledged by the Company, or by any affiliate of the Company, as
security for loans or other obligations, otherwise than to another such
affiliate of the Company, shall be deemed to be outstanding, if the pledgee is
entitled pursuant to the terms of its pledge agreement and is free to exercise
in its or his discretion the right to vote such securities, uncontrolled by the
Company or by any such affiliate.
SECTION 2.10. Temporary Securities. Until definitive Securities of any
series are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities of such series. Temporary Securities of any
series shall be substantially in the form of definitive Securities of such
series but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Securities,
as evidenced by their execution of such temporary Securities. If temporary
Securities of any series are issued, the Company will cause definitive
Securities of such series to be prepared without unreasonable delay. After the
preparation of definitive Securities of any series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series and
tenor upon surrender of such temporary Securities at the office or agency of the
Company designated for such purpose pursuant to Section 4.2, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities of any series the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of such series and tenor and authorized denominations.
Until so exchanged, the temporary Securities of any series shall be entitled to
the same benefits under this Indenture as definitive Securities of such series.
SECTION 2.11. Cancellation. The Company at any time may deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold. The Registrar, any transfer
agent and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for transfer, exchange or payment. The Trustee shall cancel
and destroy all Securities surrendered for transfer, exchange, payment or
cancellation and shall deliver a certificate of destruction to the Company. The
Company may not issue new Securities to replace Securities it has paid in full
or delivered to the Trustee for cancellation.
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SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" and "CINS" numbers (if then generally in use), and the Trustee shall use
CUSIP numbers or CINS numbers, as the case may be, in notices of redemption or
exchange as a convenience to Holders and no representation shall be made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption or exchange.
SECTION 2.13. Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, it shall pay, or shall deposit with the Paying Agent
money in immediately available funds sufficient to pay, the defaulted interest
plus (to the extent lawful) any interest payable on the defaulted interest (as
may be specified in the terms thereof, established pursuant to Section 2.3) to
the Persons who are Holders on a subsequent special record date, which shall
mean the 15th day next preceding the date fixed by the Company for the payment
of defaulted interest, whether or not such day is a Business Day. At least 15
days before such special record date, the Company shall mail to each Holder and
to the Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.14. Series May Include Tranches. A series of Securities may
include one or more tranches (each a "tranche") of Securities, including
Securities issued in a Periodic Offering. The Securities of different tranches
may have one or more different terms, including authentication dates and public
offering prices, but all the Securities within each such tranche shall have
identical terms, including authentication date and public offering price.
Notwithstanding any other provision of this Indenture, with respect to Sections
2.2 (other than the fourth paragraph thereof) through 2.4, 2.7, 2.8, 2.10, 3.1
through 3.5, 4.2, 6.1 through 6.14, 8.1 through 8.7 and 9.2, if any series of
Securities includes more than one tranche, all provisions of such sections
applicable to any series of Securities shall be deemed equally applicable to
each tranche of any series of Securities in the same manner as though originally
designated a series unless otherwise provided with respect to such series or
tranche pursuant to Section 2.3. In particular, and without limiting the scope
of the next preceding sentence, any of the provisions of such sections which
provide for or permit action to be taken with respect to a series of Securities
shall also be deemed to provide for and permit such action to be taken instead
only with respect to Securities of one or more tranches within that series (and
such provisions shall be deemed satisfied thereby), even if no comparable action
is taken with respect to Securities in the remaining tranches of that series.
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ARTICLE 3
REDEMPTION
SECTION 3.1. Applicability of Article. The provisions of this Article shall
be applicable to the Securities of any series which are redeemable before their
maturity or to any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 2.3 for Securities of
such series.
SECTION 3.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Registered Securities of any series to be redeemed
as a whole or in part at the option of the Company shall be given by mailing
notice of such redemption by first-class mail, postage prepaid, at least 30 days
and not more than 60 days prior to the date fixed for redemption to such Holders
of Registered Securities of such series at their last addresses as they shall
appear upon the Security Register. Notice of redemption to the Holders of
Unregistered Securities of any series to be redeemed as a whole or in part who
have filed their names and addresses with the Trustee pursuant to Section
313(c)(2) of the Trust Indenture Act, shall be given by mailing notice of such
redemption, by first class mail, postage prepaid, at least 30 days and not more
than 60 days prior to the date fixed for redemption, to such Holders at such
addresses as were so furnished to the Trustee (and, in the case of any such
notice given by the Company, the Trustee shall make such information available
to the Company for such purpose). Notice of redemption to all other Holders of
Unregistered Securities of any series to be redeemed as a whole or in part shall
be published in an Authorized Newspaper in The City of New York or with respect
to any Security the interest on which is based on the offered quotations in the
interbank Eurodollar market for dollar deposits in an Authorized Newspaper in
London, in each case, once in each of three successive calendar weeks, the first
publication to be not less than 30 days nor more than 60 days prior to the date
fixed for redemption. Any notice which is mailed or published in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify the principal
amount of each Security of such series
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held by such Holder to be redeemed, the CUSIP numbers of the Securities to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and surrender of
such Securities and, in the case of Securities with coupons attached thereto, of
all coupons appertaining thereto maturing after the date fixed for redemption,
that such redemption is pursuant to the mandatory or optional sinking fund, or
both, if such be the case, that interest accrued to the date fixed for
redemption will be paid as specified in such notice and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. In case any Security of a series is to be redeemed in part only, the
notice of redemption shall state the portion of the principal amount thereof to
be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Security, a new Security or Securities of such series and
tenor in principal amount equal to the unredeemed portion thereof will be
issued.
The notice of redemption of Securities of any series to be redeemed at the
option of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
On or before 10:00 a.m. New York City time on the redemption date specified
in the notice of redemption given as provided in this Section, the Company will
deposit with the Trustee or with one or more Paying Agents (or, if the Company
is acting as its own Paying Agent, set aside, segregate and hold in trust as
provided in Section 2.6) an amount of money sufficient to redeem on the
redemption date all the Securities of such series so called for redemption at
the appropriate redemption price, together with accrued interest to the date
fixed for redemption. If all of the outstanding Securities of a series are to be
redeemed, the Company will deliver to the Trustee at least 10 days prior to the
last date on which notice of redemption may be given to Holders pursuant to the
first paragraph of this Section 3.2 (or such shorter period as shall be
acceptable to the Trustee) an Officers' Certificate stating that all such
Securities are to be redeemed. If less than all the outstanding Securities of a
series are to be redeemed, the Company will deliver to the Trustee at least 15
days prior to the last date on which notice of redemption may be given to
Holders pursuant to the first paragraph of this Section 3.2 (or such shorter
period as shall be acceptable to the Trustee) an Officers' Certificate stating
the aggregate principal amount of such Securities to be redeemed. In case of a
redemption at the election of the Company prior to the expiration of any
restriction on such redemption, the Company shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders
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pursuant to this Section, an Officers' Certificate stating that such redemption
is not prohibited by such restriction.
If less than all the Securities of a series are to be redeemed, the Trustee
shall select, pro rata, by lot or in such manner as it shall deem appropriate
and fair, Securities of such series to be redeemed in whole or in part.
Securities may be redeemed in part in multiples equal to the minimum authorized
denomination for Securities of such series or any multiple thereof. The Trustee
shall promptly notify the Company in writing of the Securities of such series
selected for redemption and, in the case of any Securities of such series
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
SECTION 3.3. Payment of Securities Called for Redemption. If notice of
redemption has been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption, and on and after such
date (unless the Company shall default in the payment of such Securities at the
redemption price, together with interest accrued to such date) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue, and the unmatured coupons, if any, appertaining thereto shall be void
and, except as provided in Sections 7.11 and 8.2, such Securities shall cease
from and after the date fixed for redemption to be entitled to any benefit under
this Indenture, and the Holders thereof shall have no right in respect of such
Securities except the right to receive the redemption price thereof and unpaid
interest to the date fixed for redemption. On presentation and surrender of such
Securities at a place of payment specified in said notice, together with all
coupons, if any, appertaining thereto maturing after the date fixed for
redemption, said Securities or the specified portions thereof shall be paid and
redeemed by the Company at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; provided that payment
of interest becoming due on or prior to the date fixed for redemption shall be
payable in the case of Securities with coupons attached thereto, to the Holders
of the coupons for such interest upon surrender thereof, and in the case of
Registered Securities, to the Holders of such Registered Securities registered
as such on the relevant record date
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subject to the terms and provisions of Sections 2.4 and 2.13 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest or
Yield to Maturity (in the case of an Original Issue Discount Security) borne by
such Security.
If any Security with coupons attached thereto is surrendered for redemption
and is not accompanied by all appurtenant coupons maturing after the date fixed
for redemption, the surrender of such missing coupon or coupons may be waived by
the Company and the Trustee, if there be furnished to each of them such security
or indemnity as they may require to save each of them harmless.
Upon presentation of any Security of any series redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Company, a new Security
or Securities of such series and tenor (with any unmatured coupons attached), of
authorized denominations, in principal amount equal to the unredeemed portion of
the Security so presented.
SECTION 3.4. Exclusion of Certain Securities from Eligibility for Selection
for Redemption. Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in a
written statement signed by an authorized officer of the Company and delivered
to the Trustee at least 40 days prior to the last date on which notice of
redemption may be given as being owned of record and beneficially by, and not
pledged or hypothecated by, either (a) the Company or (b) an entity specifically
identified in such written statement as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
SECTION 3.5. Mandatory and Optional Sinking Funds. The minimum amount of
any sinking fund payment provided for by the terms of Securities of any series
is herein referred to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for by the terms of the Securities of any
series is herein referred to as an "optional sinking fund payment". The date on
which a sinking fund payment is to be made is herein referred to as the "sinking
fund payment date".
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In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Company may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except through a mandatory sinking fund payment) by the
Company or receive credit for Securities of such series (not previously so
credited) theretofore purchased or otherwise acquired (except as aforesaid) by
the Company and delivered to the Trustee for cancellation pursuant to Section
2.11, (b) receive credit for optional sinking fund payments (not previously so
credited) made pursuant to this Section, or (c) receive credit for Securities of
such series (not previously so credited) redeemed by the Company through any
optional sinking fund payment. Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price
specified in such Securities.
On or before the sixtieth day next preceding each sinking fund payment date
for any series, or such shorter period as shall be acceptable to the Trustee,
the Company will deliver to the Trustee an Officers' Certificate (a) specifying
the portion of the mandatory sinking fund payment to be satisfied by payment of
cash and the portion to be satisfied by credit of specified Securities of such
series and the basis for such credit, (b) stating that none of the specified
Securities of such series has theretofore been so credited, (c) stating that no
defaults in the payment of interest or Events of Default with respect to such
series have occurred (which have not been waived or cured) and are continuing
and (d) stating whether or not the Company intends to exercise its right to make
an optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Company
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Company to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered for
cancellation pursuant to Section 2.11 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Company shall become unconditionally obligated to make all the cash
payments or delivery of securities therein referred to, if any, on or before the
next succeeding sinking fund payment date. Failure of the Company, on or before
any such sixtieth day, to deliver such Officer's Certificate and Securities
specified in this paragraph, if any, shall not constitute a default but shall
constitute, on and as of such date, the irrevocable election of the Company (i)
that the mandatory sinking fund payment for such series due on the
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next succeeding sinking fund payment date shall be paid entirely in cash without
the option to deliver or credit Securities of such series in respect thereof and
(ii) that the Company will make no optional sinking fund payment with respect to
such series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or both) to
be made in cash on the next succeeding sinking fund payment date plus any unused
balance of any preceding sinking fund payments made in cash shall exceed $50,000
(or a lesser sum if the Company shall so request with respect to the Securities
of any series), such cash shall be applied on the next succeeding sinking fund
payment date to the redemption of Securities of such series at the sinking fund
redemption price thereof together with accrued interest thereon to the date
fixed for redemption. If such amount shall be $50,000 (or such lesser sum) or
less and the Company makes no such request then it shall be carried over until a
sum in excess of $50,000 (or such lesser sum) is available. The Trustee shall
select, in the manner provided in Section 3.2, for redemption on such sinking
fund payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by the
Company) inform the Company of the serial numbers of the Securities of such
series (or portions thereof) so selected. Securities shall be excluded from
eligibility for redemption under this Section if they are identified by
registration and certificate number in an Officers' Certificate delivered to the
Trustee at least 60 days prior to the sinking fund payment date as being owned
of record and beneficially by, and not pledged or hypothecated by either (a) the
Company or (b) an entity specifically identified in such Officers' Certificate
as directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company. The Trustee, in the name and at the
expense of the Company (or the Company, if it shall so request the Trustee in
writing) shall cause notice of redemption of the Securities of such series to be
given in substantially the manner provided in Section 3.2 (and with the effect
provided in Section 3.3) for the redemption of Securities of such series in part
at the option of the Company. The amount of any sinking fund payments not so
applied or allocated to the redemption of Securities of such series shall be
added to the next cash sinking fund payment for such series and, together with
such payment, shall be applied in accordance with the provisions of this
Section. Any and all sinking fund moneys held on the stated maturity date of the
Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular
Securities of such series shall be applied, together with other moneys, if
necessary, sufficient for the purpose, to the payment of the
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Principal of, and interest on, the Securities of such series at maturity.
On or before 10:00 a.m. New York City time on each sinking fund payment
date, the Company shall pay to the Trustee in cash or shall otherwise provide
for the payment of all interest accrued to the date fixed for redemption on
Securities to be redeemed on the next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities of a
series with sinking fund moneys or mail any notice of redemption of Securities
of such series by operation of the sinking fund during the continuance of a
Default in payment of interest on such Securities or of any Event of Default
except that, where the mailing of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Company a sum
sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such Default or Event of Default shall
occur, and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such default or Event of Default, be deemed to have been
collected under Article 6 and held for the payment of all such Securities. In
case such Event of Default shall have been waived as provided in Section 6.4 or
the Default cured on or before the sixtieth day preceding the sinking fund
payment date in any year, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the
redemption of such Securities.
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities. The Company shall pay the Principal of
and interest on the Securities on the dates and in the manner provided in the
Securities and this Indenture. The interest on Securities with coupons attached
(together with any additional amounts payable pursuant to the terms of such
Securities) shall be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as they
severally mature. The interest on any temporary Unregistered Securities
(together with any additional amounts payable pursuant to the terms of such
Securities) shall be paid, as to the installments of interest evidenced by
coupons attached thereto, if any, only upon presentation and surrender thereof,
and, as to the other in-
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stallments of interest, if any, only upon presentation of such Unregistered
Securities for notation thereon of the payment of such interest. The interest on
Registered Securities (together with any additional amounts payable pursuant to
the terms of such Securities) shall be payable only to the Holders thereof and
at the option of the Company may be paid by mailing checks for such interest
payable to or upon the written order of such Holders at their last addresses as
they appear on the Security Register of the Company.
Notwithstanding any provisions of this Indenture and the Securities of any
series to the contrary, if the Company and a Holder of any Registered Security
so agree, payments of interest on, and any portion of the Principal of, such
Holder's Registered Security (other than interest payable at maturity or on any
redemption or repayment date or the final payment of Principal on such Security)
shall be made by the Paying Agent, upon receipt from the Company of immediately
available funds by 11:00 A.M., New York City time (or such other time as may be
agreed to between the Company and the Paying Agent), directly to the Holder of
such Security (by Federal funds wire transfer or otherwise) if the Holder has
delivered written instructions to the Trustee 15 days prior to such payment date
requesting that such payment will be so made and designating the bank account to
which such payments shall be so made and in the case of payments of Principal,
surrenders the same to the Trustee in exchange for a Security or Securities
aggregating the same principal amount as the unredeemed principal amount of the
Securities surrendered. The Trustee shall be entitled to rely on the last
instruction delivered by the Holder pursuant to this Section 4.1 unless a new
instruction is delivered 15 days prior to a payment date. The Company will
indemnify and hold each of the Trustee and any Paying Agent harmless against any
loss, liability or expense (including attorneys' fees) resulting from any act or
omission to act on the part of the Company or any such Holder in connection with
any such agreement or from making any payment in accordance with any such
agreement.
The Company shall pay interest on overdue Principal, and interest on
overdue installments of interest, to the extent lawful, at the rate per annum
specified in the Securities.
SECTION 4.2. Maintenance of Office or Agency. The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where
Securities may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company hereby
initially designates the office of the Trustee, located in the Borough of
Manhattan, The City of
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New York, as such office or agency of the Company. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 10.2.
The Company will maintain one or more agencies in a city or cities located
outside the United States (including any city in which such an agency is
required to be maintained under the rules of any stock exchange on which the
Securities of any series are listed) where the Unregistered Securities, if any,
of each series and coupons, if any, appertaining thereto may be presented for
payment. No payment on any Unregistered Security or coupon will be made upon
presentation of such Unregistered Security or coupon at an agency of the Company
within the United States nor will any payment be made by transfer to an account
in, or by mail to an address in, the United States unless, pursuant to
applicable United States laws and regulations then in effect, such payment can
be made without adverse tax consequences to the Company. Notwithstanding the
foregoing, if full payment in United States Dollars ("Dollars") at each agency
maintained by the Company outside the United States for payment on such
Unregistered Securities or coupons appertaining thereto is illegal or
effectively precluded by exchange controls or other similar restrictions,
payments in Dollars of Unregistered Securities of any series and coupons
appertaining thereto which are payable in Dollars may be made at an agency of
the Company maintained in the Borough of Manhattan, The City of New York.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of any series may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in
the Borough of Manhattan, The City of New York for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 4.3. Securityholders' Lists. The Company will furnish or cause to
be furnished to the Trustee a list in such form as the Trustee may reasonably
require of the names and addresses of the holders of the Securities pursuant to
Section 312 of the Trust Indenture Act of 1939 (a) semi-annually not more than
15 days after each record date for the payment of
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semi-annual interest on the Securities, as hereinabove specified, as of such
record date, and (b) at such other times as the Trustee may request in writing,
within thirty days after receipt by the Company of any such request as of a date
not more than 15 days prior to the time such information is furnished.
SECTION 4.4. Certificate to Trustee. The Company will furnish to the
Trustee annually, on or before a date not more than four months after the end of
its fiscal year (which, on the date hereof, is a calendar year), a brief
certificate (which need not contain the statements required by Section 10.4)
from its principal executive, financial or accounting officer as to his or her
knowledge of the compliance of the Company with all conditions and covenants
under this Indenture (such compliance to be determined without regard to any
period of grace or requirement of notice provided under this Indenture) which
certificate shall comply with the requirements of the Trust Indenture Act.
SECTION 4.5. Reports by the Company. The Company covenants to file with the
Trustee, within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents, and
other reports which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, Etc. The Company shall not consolidate
with, merge with or into, or sell, convey, transfer, lease or otherwise dispose
of all or substantially all of its property and assets (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions) to, any Person (other than a consolidation with or merger with or
into a Subsidiary or a sale, conveyance, transfer, lease or other disposition to
a Subsidiary) or permit any Person to merge with or into the Company unless
either (x) the Company shall be the continuing Person or (y) the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or to which properties and assets of the Company shall be a solvent
corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the
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Trustee, all of the obligations of the Company on all of the Securities and
under this Indenture and the Company shall have delivered to the Trustee (A) an
Opinion of Counsel stating that such consolidation, merger or transfer and such
supplemental indenture complies with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with and that such supplemental indenture constitutes the legal, valid and
binding obligation of the Company or such successor enforceable against such
entity in accordance with its terms, subject to customary exceptions and (B) an
Officers' Certificate to the effect that immediately after giving effect to such
transaction, no Default shall have occurred and be continuing.
SECTION 5.2. Successor Substituted. Upon any consolidation or merger, or
any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.1 of this Indenture, the successor Person formed by such consolidation
or into which the Company is merged or to which such sale, conveyance, transfer,
lease or other disposition is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein.
ARTICLE 6
DEFAULT AND REMEDIES
SECTION 6.1. Events of Default. An "Event of Default" shall occur with
respect to the Securities of any series if:
(a) the Company defaults in the payment of the Principal of any Security of
such series when the same becomes due and payable at maturity, upon
acceleration, redemption or mandatory repurchase, including as a sinking fund
installment, or otherwise;
(b) the Company defaults in the payment of interest on any Security of such
series when the same becomes due and payable, and such default continues for a
period of 30 days;
(c) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture with respect to any
Security of such series
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or in the Securities of such series and such default or breach continues for a
period of 60 consecutive days after written notice to the Company by the
Trustee or to the Company and the Trustee by the Holders of 25% or more in
aggregate principal amount of the Securities of all series affected thereby;
(d) a court having jurisdiction in the premises enters a decree or order
for relief in respect of the Company or any of its Material Subsidiaries in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Company
or any of its Material Subsidiaries or for all or substantially all of the
property and assets of the Company or any of its Material Subsidiaries or
ordering the winding-up or liquidation of the affairs of the Company or any of
its Material Subsidiaries, and, in each case, such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days;
(e) the Company or any of its Material Subsidiaries (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any of
its Material Subsidiaries or for all or substantially all of the property and
assets of the Company or any of its Material Subsidiaries or (C) effects any
general assignment for the benefit of creditors; or
(f) any other Event of Default established pursuant to Section 2.3 with
respect to the Securities of such series occurs.
SECTION 6.2. Acceleration. (a) If an Event of Default other than as
described in clauses (d) or (e) of Section 6.1 with respect to the Securities of
any series then outstanding occurs and is continuing, then, and in each and
every such case, except for any series of Securities the principal of which
shall have already become due and payable, either the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Securities of any such
affected series then outstanding hereunder (each such series treated as a
separate class) by notice in writing to the Company (and to the Trustee if given
by Securityholders), may declare the entire Principal
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(or, if the Securities of any such series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series established pursuant to Section 2.3) of all Securities of
such affected series, and the interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable.
(b) If an Event of Default described in clause (d) or (e) of Section 6.1
occurs and is continuing, then the Principal amount (or, if any Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof established pursuant to Section 2.3) of all the
Securities then outstanding and interest accrued thereon, if any, shall be and
become immediately due and payable, subject to the prior payment in full of all
Senior and Subordinated Debt, without any notice or other action by any Holder
or the Trustee, to the full extent permitted by applicable law.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal (or, if the Securities are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof established pursuant to Section 2.3) of the Securities of any series (or
of all the Securities, as the case may be) shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Securities of each such series (or of all
the Securities, as the case may be) and the principal of any and all Securities
of each such series (or of all the Securities, as the case may be) which shall
have become due otherwise than by acceleration (with interest upon such
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of each such series to the date of such
payment or deposit) and such amount as shall be sufficient to cover all amounts
owing the Trustee under Section 7.7, and if any and all Events of Default under
the Indenture, other than the non-payment of the principal of Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then and in every such case the Holders
of a majority in aggregate principal amount of all the then outstanding
Securities of all such series that have been accelerated (voting as a single
class), by written notice to the Company and to the Trustee, may waive all
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defaults with respect to all such series (or with respect to all the Securities,
as the case may be) and rescind and annul such declaration and its consequences,
but no such waiver or rescission and annulment shall extend to or shall affect
any subsequent default or shall impair any right consequent thereon.
For all purposes under this Indenture, if a portion of the principal of any
Original Issue Discount Securities shall have been accelerated and declared due
and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
SECTION 6.3. Other Remedies. If a payment default or an Event of Default
with respect to the Securities of any series occurs and is continuing, the
Trustee may pursue, in its own name or as trustee of an express trust, any
available remedy by proceeding at law or in equity to collect the payment of
principal of and interest on the Securities of such series or to enforce the
performance of any provision of the Securities of such series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding.
SECTION 6.4. Waiver of Past Defaults. Subject to Sections 6.2, 6.7 and 9.2,
the Holders of at least a majority in principal amount (or, if the Securities
are Original Issue Discount Securities, such portion of the principal as is then
accelerable under Section 6.2) of the outstanding Securities of all series
affected (voting as a single class), by notice to the Trustee, may waive an
existing Default or Event of Default with respect to the Securities of such
series and its consequences, except a Default in the payment of Principal of or
interest on any Security as specified in clauses (a) or (b) of Section 6.1 or in
respect of a covenant or provision of this Indenture which cannot be modified or
amended without the consent of the Holder of each outstanding Security affected.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default with respect to the Securities of such series
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arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 6.5. Control by Majority. Subject to Sections 7.1 and 7.2(v), the
Holders of at least a majority in aggregate principal amount (or, if any
Securities are Original Issue Discount Securities, such portion of the principal
as is then accelerable under Section 6.2) of the outstanding Securities of all
series affected (voting as a single class) may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Securities of such series by this Indenture; provided, that the Trustee may
refuse to follow any direction that conflicts with law or this Indenture, that
may involve the Trustee in personal liability or that the Trustee determines in
good faith may be unduly prejudicial to the rights of Holders not joining in the
giving of such direction; and provided, further, that the Trustee may take any
other action it deems proper that is not inconsistent with any directions
received from Holders of Securities pursuant to this Section 6.5.
SECTION 6.6. Limitation on Suits. No Holder of any Security of any series
may institute any proceeding, judicial or otherwise, with respect to this
Indenture or the Securities of such series, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given to the Trustee written notice of a
continuing Event of Default with respect to the Securities of such series;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Securities of all such series affected shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered and, if requested, provided the
Trustee indemnity reasonably satisfactory to the Trustee against any costs,
liabilities or expenses to be incurred in compliance with such request;
(iv) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
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(v) during such 60-day period, the Holders of at least a majority in
aggregate principal amount of the outstanding Securities of all such affected
series have not given the Trustee a direction that is inconsistent with such
written request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Security to
receive payment of Principal of or interest, if any, on such Holder's Security
on or after the respective due dates expressed on such Security, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of Default with
respect to the Securities of any series in payment of Principal or interest
specified in clause (a) or (b) of Section 6.1 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount (or such portion thereof as specified
in the terms established pursuant to Section 2.3 of Original Issue Discount
Securities) of Principal of, and accrued interest remaining unpaid on, together
with interest on overdue Principal of, and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest on, the
Securities of such series, in each case at the rate or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in such Securities, and
such further amount as shall be sufficient to cover all amounts owing the
Trustee under Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for amounts due
the Trustee under Section 7.7) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor on the Securities),
its creditors or its property and shall be entitled and empowered to collect and
receive any moneys, securities or other property payable or deliverable upon
conversion or exchange of the Securities or upon any such claims and to
distribute the same, and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
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that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it under Section 7.7. Nothing
herein contained shall be deemed to empower the Trustee to authorize or consent
to, or accept or adopt on behalf of any Holder, any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
SECTION 6.10. Application of Proceeds. Any moneys collected by the Trustee
pursuant to this Article in respect of the Securities of any series shall be
applied in the following order at the date or dates fixed by the Trustee and, in
case of the distribution of such moneys on account of Principal or interest,
upon presentation of the several Securities and coupons appertaining to such
Securities in respect of which moneys have been collected and noting thereon the
payment, or issuing Securities of such series and tenor in reduced principal
amounts in exchange for the presented Securities of such series and tenor if
only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 7.7
applicable to the Securities of such series in respect of which moneys have
been collected;
SECOND: In case the principal of the Securities of such series in respect
of which moneys have been collected shall not have become and be then due and
payable, to the payment of interest on the Securities of such series in
default in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in such Securities, such payments to be made ratably to
the persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in respect of
which moneys have been collected shall have become and shall be then due and
payable, to the payment of the whole amount then owing and unpaid upon all the
Securities of such series for Principal and interest, with interest upon the
overdue Principal, and (to the extent that such interest has been collected by
the Trustee) upon overdue installments of interest at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in
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the Securities of such series; and in case such moneys shall be insufficient
to pay in full the whole amount so due and unpaid upon the Securities of such
series, then to the payment of such Principal and interest or Yield to
Maturity, without preference or priority of Principal over interest or Yield
to Maturity, or of interest or Yield to Maturity over Principal, or of any
installment of interest over any other installment of interest, or of any
Security of such series over any other Security of such series, ratably to the
aggregate of such Principal and accrued and unpaid interest or Yield to
Maturity; and
FOURTH: To the payment of the remainder, if any, to the Company or any
other person lawfully entitled thereto.
SECTION 6.11. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then, and in
every such case, subject to any determination in such proceeding, the Company,
the Trustee and the Holders shall be restored to their former positions
hereunder and thereafter all rights and remedies of the Company, Trustee and the
Holders shall continue as though no such proceeding had been instituted.
SECTION 6.12. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, in either case in respect to the
Securities of any series, a court may require any party litigant in such suit
(other than the Trustee) to file an undertaking to pay the costs of the suit,
and the court may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant (other than the Trustee) in the suit having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.12 does not apply to a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in principal amount of the
outstanding Securities of such series.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or
wrongfully taken Securities in Section 2.8, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or
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now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article 6 or by law to the Trustee or to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or by
the Holders, as the case may be.
ARTICLE 7
TRUSTEE
SECTION 7.1. General. The duties and responsibilities of the Trustee shall
be as provided by the Trust Indenture Act and as set forth herein.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, unless it receives indemnity satisfactory to it
against any loss, liability or expense. Whether or not therein expressly so
provided, every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Article 7.
SECTION 7.2. Certain Rights of Trustee. Subject to Trust Indenture Act
Sections 315(a) through (d):
(i) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, Officers' Certificate, Opinion
of Counsel (or both), statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper person or persons. The Trustee
need not investigate any fact or matter stated in the document, but the
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
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(ii) before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/or an Opinion of Counsel, which shall conform to
Section 10.4. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such certificate or opinion. Subject to
Sections 7.1 and 7.2, whenever in the administration of the trusts of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under
the provisions of this Indenture upon the faith thereof;
(iii) the Trustee may act through its attorneys and agents not regularly in
its employ and shall not be responsible for the misconduct or negligence of
any agent or attorney appointed with due care;
(iv) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and any
Board Resolution may be evidenced to the Trustee by a copy thereof certified
by the Secretary or an Assistant Secretary of the Company;
(v) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction;
(vi) the Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers or for any action it takes or omits to take in accordance with the
direction of the Holders in accordance with Section 6.5 relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture;
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(vii) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon; and
(viii) prior to the occurrence of an Event of Default hereunder and after
the curing or waiving of all Events of Default, the Trustee shall not be bound
to make any investigation into the facts or matters stated in any resolution,
certificate, Officers' Certificate, Opinion of Counsel, Board Resolution,
statement, instrument, opinion, report, notice, request, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, or other paper
or document unless requested in writing so to do by the Holders of not less
than a majority in aggregate principal amount of the Securities of all series
affected then outstanding; provided that, if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding.
SECTION 7.3. Individual Rights of Trustee. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311.
For purposes of Trust Indenture Act Section 311(b)(4) and (6), the following
terms shall mean:
(a) "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange, acceptance
or obligation which is made, drawn, negotiated or incurred by the Company for
the purpose of financing the purchase, processing, manufacturing, shipment,
storage or sale of goods, wares or merchandise and which is secured by
documents evidencing title to, possession of, or a lien upon, the goods, wares
or merchandise or the receivables or proceeds arising from the
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sale of the goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with the
creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 7.4. Trustee's Disclaimer. The recitals contained herein and in the
Securities (except the Trustee's certificate of authentication) shall be taken
as statements of the Company and not of the Trustee and the Trustee assumes no
responsibility for the correctness of the same. Neither the Trustee nor any of
its agents (i) makes any representation as to the validity or adequacy of this
Indenture or the Securities and (ii) shall be accountable for the Company's use
or application of the proceeds from the Securities.
SECTION 7.5. Notice of Default. If any Default with respect to the
Securities of any series occurs and is continuing and if such Default is known
to the actual knowledge of a Responsible Officer with the Corporate Trust
Department of the Trustee, the Trustee shall give to each Holder of Securities
of such series notice of such Default within 90 days after it occurs (i) if any
Unregistered Securities of such series are then outstanding, to the Holders
thereof, by publication at least once in an Authorized Newspaper in the Borough
of Manhattan, The City of New York and at least once in an Authorized Newspaper
in London and (ii) to all Holders of Securities of such series in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act, unless such
Default shall have been cured or waived before the mailing or publication of
such notice; provided, however, that, except in the case of a Default in the
payment of the Principal of or interest on any Security, the Trustee shall be
protected in withholding such notice if the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.
SECTION 7.6. Reports by Trustee to Holders. Within 60 days after each May
15, beginning with May 15, 1999, the Trustee shall mail to each Holder as and to
the extent provided in Trust Indenture Act Section 313(c) a brief report dated
as of such May 15, if required by Trust Indenture Act Section 313(a).
SECTION 7.7. Compensation and Indemnity. The Company shall pay to the
Trustee such compensation as shall be agreed upon in writing from time to time
for its services. The compensation of the Trustee shall not be limited by any
law on compensation of a Trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable
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out-of-pocket expenses, disbursements and advances incurred or made by the
Trustee. Such expenses shall include the reasonable compensation and expenses of
the Trustee's agents, counsel and other persons not regularly in its employ.
The Company shall indemnify the Trustee for, and hold it harmless against,
any loss or liability or expense incurred by it without negligence or bad faith
on its part arising out of or in connection with the acceptance or
administration of this Indenture and the Securities or the issuance of the
Securities or of series thereof or the trusts hereunder and the performance of
duties under this Indenture and the Securities, including the costs and expenses
of defending itself against or investigating any claim or liability and of
complying with any process served upon it or any of its officers in connection
with the exercise or performance of any of its powers or duties under this
Indenture and the Securities.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay Principal of, and interest on particular
Securities.
The obligations of the Company under this Section to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture or the rejection or termination of
this Indenture under bankruptcy law. Such additional indebtedness shall be a
senior claim to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of particular Securities or coupons, and the Securities are hereby
subordinated to such senior claim. If the Trustee renders services and incurs
expenses following an Event of Default under Section 6.1(d) or Section 6.1(e)
hereof, the parties hereto and the holders by their acceptance of the Securities
hereby agree that such expenses are intended to constitute expenses of
administration under any bankruptcy law.
SECTION 7.8. Replacement of Trustee. A resignation or removal of the
Trustee as Trustee with respect to the Securities of any series and appointment
of a successor Trustee as Trustee with respect to the Securities of any series
shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.
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The Trustee may resign as Trustee with respect to the Securities of any
series at any time by so notifying the Company in writing. The Holders of a
majority in principal amount of the outstanding Securities of any series may
remove the Trustee as Trustee with respect to the Securities of such series by
so notifying the Trustee in writing and may appoint a successor Trustee with
respect thereto with the consent of the Company. The Company may remove the
Trustee as Trustee with respect to the Securities of any series if: (i) the
Trustee is no longer eligible under Section 7.10 of this Indenture; (ii) the
Trustee is adjudged a bankrupt or insolvent; (iii) a receiver or other public
officer takes charge of the Trustee or its property; or (iv) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed as Trustee with respect to the
Securities of any series, or if a vacancy exists in the office of Trustee with
respect to the Securities of any series for any reason, the Company shall
promptly appoint a successor Trustee with respect thereto. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the outstanding Securities of such series may appoint a successor
Trustee in respect of such Securities to replace the successor Trustee appointed
by the Company. If the successor Trustee with respect to the Securities of any
series does not deliver its written acceptance required by the next succeeding
paragraph of this Section 7.8 within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of a majority in
principal amount of the outstanding Securities of such series may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect thereto.
A successor Trustee with respect to the Securities of any series shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Company. Immediately after the delivery of such written acceptance, subject
to the lien provided for in Section 7.7, (i) the retiring Trustee shall transfer
all property held by it as Trustee in respect of the Securities of such series
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee in respect of the Securities of such series shall become effective and
(iii) the successor Trustee shall have all the rights, powers and duties of the
Trustee in respect of the Securities of such series under this Indenture. A
successor Trustee shall mail notice of its succession to each Holder of
Securities of such series.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee
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all such rights, powers and trusts referred to in the preceding paragraph.
The Company shall give notice of any resignation and any removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee in respect of the Securities of such series to all Holders of
Securities of such series. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee with respect to the Securities
of any series pursuant to this Section 7.8, the Company's obligations under
Section 7.7 shall continue for the benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a Trustee who
satisfies the requirements of Trust Indenture Act Section 310(a). The Trustee
shall have a combined capital and surplus of at least $25,000,000 as set forth
in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable for
interest on any money received by it except as the Trustee may agree in writing
with the Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law and except for money held in
trust under Article 8 of this Indenture.
ARTICLE 8
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 8.1. Satisfaction and Discharge of Indenture. If at any time (a)
the Company shall have paid or caused to be paid the principal of and interest
on all the Securities of any series outstanding hereunder (other than Securities
of such series which have been destroyed, lost or stolen and which
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have been replaced or paid as provided in Section 2.8) as and when the same
shall have become due and payable, or (b) the Company shall have delivered to
the Trustee for cancellation all securities of any series theretofore
authenticated (other than any Securities of such series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.8) or (c) (i) all the securities of such series not theretofore
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and (ii) the Company shall have
irrevocably deposited or caused to be deposited with the Trustee as trust funds
the entire amount in cash (other than moneys repaid by the Trustee or any paying
agent to the Company in accordance with Section 8.4) or U.S. Government
Obligations, maturing as to principal and interest in such amounts and at such
times as will insure the availability of cash sufficient to pay at maturity or
upon redemption all Securities of such series (other than any Securities of such
series which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.8) not theretofore delivered to the
Trustee for cancellation, including principal and interest due or to become due
on or prior to such date of maturity as the case may be, and if, in any such
case, the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company with respect to Securities of such series, then this
Indenture shall cease to be of further effect with respect to Securities of such
series (except as to (i) rights of registration of transfer and exchange os
securities of such series, and the Company's right of optional redemption, if
any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Securities, (iii) rights of holders to receive payments of principal thereof and
interest thereon, upon the original stated due dates therefor (but not upon
acceleration) and remaining rights of the holders to receive mandatory sinking
fund payments, if any, (iv) the rights, obligations and immunities of the
Trustee hereunder and (v) the rights of the Securityholders of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them), and the Trustee, on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture with respect to such series;
provided, that the rights of Holders of the Securities to receive amounts in
respect of principal of and interest on the Securities held by them shall not be
delayed longer than required by then-applicable mandatory rules or policies of
any securities exchange upon which the Securi-
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ties are listed. The Company agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities of such series.
SECTION 8.2. Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 8.4 and to the subordination provisions of
Article 11 hereof, all moneys deposited with the Trustee pursuant to Section 8.1
shall be held in trust and applied by it to the payment, either directly or
through any paying agent (including the Company acting as its own paying agent),
to the Holders of the particular Securities of such series for the payment or
redemption of which such moneys have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest; but such money
need not be segregated from other funds except to the extent required by law.
SECTION 8.3. Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to Securities of
any series, all moneys then held by any paying agent under the provisions of
this Indenture with respect to such series of Securities shall, upon demand of
the Company, be repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.
SECTION 8.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed
for Two Years. Any moneys deposited with or paid to the Trustee or any paying
agent for the payment of the principal of or interest on any Security of any
series and not applied but remaining unclaimed for two years after the date upon
which such principal or interest shall have become due and payable, shall, upon
the written request of the Company and unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law, be
repaid to the Company by the Trustee for such series or such paying agent, and
the Holder of the Security of such series shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
laws, thereafter look only to the Company for any payment which such Holder may
be entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease.
SECTION 8.5. Defeasance and Discharge of Indenture. The Company shall be
deemed to have paid and shall be discharged from any and all obligations in
respect of the Securities of any series, on the 123rd day after the deposit
referred to in clause (A) hereof has been made, and the provisions of
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this Indenture shall no longer be in effect with respect to the Securities of
such series (and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same), except as to: (a) rights of
registration of transfer and exchange, and the Company's right of optional
redemption, (b) substitution of apparently mutilated, defaced, destroyed, lost
or stolen Securities, (c) rights of holders to receive payments of principal
thereof and interest thereon, upon the original stated due dates therefor (but
not upon acceleration), (d) the rights, obligations and immunities of the
Trustee hereunder and (e) the rights of the Securityholders of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them; provided that the following conditions shall have
been satisfied:
(A) with reference to this provision the Company has deposited or caused to
be irrevocably deposited with the Trustee (or another trustee satisfying the
requirements of Sections 7.8 and 7.10) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders
of the Securities of such series, (i) money in an amount, or (ii) U.S.
Government Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide not later than one
day before the due date of any payment referred to in subclause (x) or (y) of
this clause (A) money in an amount, or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge without consideration of the reinvestment of
such interest and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee (x) the
principal of, premium, if any, and each installment of interest on the
outstanding Securities of such series on the due dates thereof and (y) any
mandatory sinking fund payments or analogous payments applicable to the
Securities of such series on the day on which such payments are due and
payable in accordance with the terms of Securities of such series and the
Indenture with respect to the Securities of such series;
(B) the Company has delivered to the Trustee (i) either (x) an Opinion of
Counsel to the effect that Holders of Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result of
the Company's exercise of its option under this Section 8.5 and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as
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would have been the case if such deposit, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon a ruling of the Internal
Revenue Service to the same effect or a change in applicable federal income
tax law or related treasury regulations after the date of this Indenture or
(y) a ruling directed to the Trustee received from the Internal Revenue
Service to the same effect as the aforementioned Opinion of Counsel and (ii)
an Opinion of Counsel to the effect that the creation of the defeasance trust
does not violate the Investment Company Act of 1940 and after the passage of
123 days following the deposit, the trust fund will not be subject to the
effect of Section 547 of the U.S. Bankruptcy Code or Section 15 of the New
York Debtor and Creditor Law;
(C) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be
continuing on the date of such deposit or during the period ending on the
123rd day after the date of such deposit, and such deposit shall not result in
a breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which the Company is
bound;
(D) the Company is not prohibited from making payments in respect of the
Securities by Article 11 hereof; and
(E) if at such time the Securities of such series are listed on a national
securities exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Securities of such series will not be delisted
as a result of such deposit, defeasance and discharge.
SECTION 8.6. Defeasance of Certain Obligations. The Company may omit to
comply with any term, provision or condition set forth in, and this Indenture
will no longer be in effect with respect to, any covenant in Article 4 or
Section 5.1 established pursuant to Section 2.3 in any indenture supplemental
hereto and clause (c) (with respect to any covenants in Article 4 or Section 5.1
established pursuant to Section 2.3 in any indenture supplemental hereto) and
clause (f) of Section 6.1 shall be deemed not to be an Event of Default, and the
provisions of Article 11 shall not apply with respect to the Securities of any
series, if
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(A) with reference to this Section 8.6, the Company has deposited or caused
to be irrevocably deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.8) as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders of the
Securities of such series and the Indenture with respect to the Securities of
such series, (i) money in an amount or (ii) U.S. Government Obligations which
through the payment of interest and principal in respect thereof in accordance
with their terms will provide not later than one day before the due dates
thereof or earlier redemption (irrevocably provided for under agreements
satisfactory to the Trustee), as the case may be, of any payment referred to
in subclause (x) or (y) of this clause (A) money in an amount, or (iii) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge without consideration
of the reinvestment of such interest and after payment of all federal, state
and local taxes or other charges and assessments in respect thereof payable by
the Trustee (x) the principal of, premium, if any, and each installment of
interest on the outstanding Securities on the due date thereof or earlier
redemption (irrevocably provided for under arrangements satisfactory to the
Trustee), as the case may be, and (y) any mandatory sinking fund payments or
analogous payments applicable to the Securities of such series and the
Indenture with respect to the Securities of such series on the day on which
such payments are due and payable in accordance with the terms of the
Indenture and of Securities of such series and the Indenture with respect to
the Securities of such series;
(B) the Company has delivered to the Trustee (i) an Opinion of Counsel to
the effect that Holders of Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of the
Company's exercise of its option under this Section 8.6 and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred and (ii) an Opinion of Counsel to the effect that the creation of the
defeasance trust does not violate the Investment Company Act of 1940 and after
the passage of 123 days following the deposit, the trust fund will not be
subject to the effect of Section 547 of the U.S. Bankruptcy Code or Section 15
of the New York Debtor and Creditor Law;
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(C) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be
continuing on the date of such deposit or during the period ending on the
123rd day after the date of such deposit, and such deposit shall not result in
a breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which the Company is
bound;
(D) the Company is not prohibited from making payments in respect of the
Securities by Article 11 hereof; and
(E) if at such time the Securities of such series are listed on a national
securities exchange, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Securities of such series will not be delisted
as a result of such deposit, defeasance and discharge.
SECTION 8.7. Reinstatement. If the Trustee or paying agent is unable to
apply any monies or U.S. Government Obligations in accordance with Article 8 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article until such time as the Trustee or paying agent is
permitted to apply all such monies or U.S. Government Obligations in accordance
with Article 8; provided, however, that if the Company has made any payment of
principal of or interest on any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the monies or U.S. Government
Obligations held by the Trustee or paying agent.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders. The Company and the Trustee may
amend or supplement this Indenture or the Securities of any series without
notice to or the consent of any Holder:
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(1) to cure any ambiguity, defect or inconsistency in this Indenture;
provided that such amendments or supplements shall not materially and
adversely affect the interests of the Holders;
(2) to comply with Article 5;
(3) to comply with any requirements of the Commission in connection with
the qualification of this Indenture under the Trust Indenture Act;
(4) to evidence and provide for the acceptance of appointment hereunder
with respect to the Securities of any or all series by a successor Trustee;
(5) to establish the form or forms or terms of Securities of any series or
of the coupons appertaining to such Securities as permitted by Section 2.3;
(6) to provide for uncertificated or Unregistered Securities and to make
all appropriate changes for such purpose; and
(7) to make any change that does not materially and adversely affect the
rights of any Holder.
SECTION 9.2. With Consent of Holders. Subject to Sections 6.4 and 6.7,
without prior notice to any Holders, the Company and the Trustee may amend this
Indenture and the Securities of any series with the written consent of the
Holders of a majority in principal amount of the outstanding Securities of all
series affected by such amendment (all such series voting as a separate class),
and the Holders of a majority in principal amount of the outstanding Securities
of all series affected thereby (all such series voting as a separate class) by
written notice to the Trustee may waive future compliance by the Company with
any provision of this Indenture or the Securities of such series.
Notwithstanding the provisions of this Section 9.2, without the consent of
each Holder affected thereby, an amendment or waiver, including a waiver
pursuant to Section 6.4, may not:
(i) change the stated maturity of the Principal of, or any sinking fund
obligation or any installment of interest on, such Holder's Security,
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(ii) reduce the Principal amount thereof or the rate of interest thereon
(including any amount in respect of original issue discount);
(iii) reduce the above stated percentage of outstanding Securities the
consent of whose holders is necessary to modify or amend the Indenture with
respect to the Securities of the relevant series; and
(iv) reduce the percentage in principal amount of outstanding Securities of
the relevant series the consent of whose Holders is required for any
supplemental indenture, for any waiver of compliance with certain provisions
of this Indenture or certain Defaults and their consequences provided for in
this Indenture.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of Holders of Securities of such series with respect to such covenant or
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series or of the coupons appertaining to such
Securities.
It shall not be necessary for the consent of any Holder under this Section
9.2 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall give to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. The Company will mail
supplemental indentures to Holders upon request. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture or waiver.
SECTION 9.3. Revocation and Effect of Consent. Until an amendment or waiver
becomes effective, a consent to it by a Holder is a continuing consent by the
Holder and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the Security of the consenting Holder, even if
notation of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to its Security or portion of its
Security. Such revocation shall be effective only if the Trustee receives the
notice of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or
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waiver shall become effective with respect to any Securities affected thereby on
receipt by the Trustee of written consents from the requisite Holders of
outstanding Securities affected thereby.
The Company may, but shall not be obligated to, fix a record date (which
may be not less than five nor more than 60 days prior to the solicitation of
consents) for the purpose of determining the Holders of the Securities of any
series affected entitled to consent to any amendment, supplement or waiver. If a
record date is fixed, then, notwithstanding the immediately preceding paragraph,
those Persons who were such Holders at such record date (or their duly
designated proxies) and only those Persons shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be such Holders after such record date.
No such consent shall be valid or effective for more than 90 days after such
record date.
After an amendment, supplement or waiver becomes effective with respect to
the Securities of any series affected thereby, it shall bind every Holder of
such Securities unless it is of the type described in any of clauses (i) through
(iv) of Section 9.2. In case of an amendment or waiver of the type described in
clauses (i) through (iv) of Section 9.2, the amendment or waiver shall bind each
such Holder who has consented to it and every subsequent Holder of a Security
that evidences the same indebtedness as the Security of the consenting Holder.
SECTION 9.4. Notation on or Exchange of Securities. If an amendment,
supplement or waiver changes the terms of any Security, the Trustee may require
the Holder thereof to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder and the Trustee may place an appropriate notation on any Security of
such series thereafter authenticated. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security of the same series and tenor that
reflects the changed terms.
SECTION 9.5. Trustee to Sign Amendments, Etc. The Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 is authorized or permitted by this Indenture, stating
that all requisite consents have been obtained or that no consents are required
and stating that such supplemental indenture constitutes the legal, valid and
binding
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obligation of the Company, enforceable against the Company in accordance with
its terms, subject to customary exceptions. Subject to the preceding sentence,
the Trustee shall sign such amendment, supplement or waiver if the same does not
adversely affect the rights of the Trustee. The Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.6. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article 9 shall conform to the requirements
of the Trust Indenture Act as then in effect.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act of 1939. This Indenture shall incorporate
and be governed by the provisions of the Trust Indenture Act that are required
to be part of and to govern indentures qualified under the Trust Indenture Act.
SECTION 10.2. Notices. Any notice or communication shall be sufficiently
given if written and (a) if delivered in person when received or (b) if mailed
by first class mail 5 days after mailing, or (c) as between the Company and the
Trustee if sent by facsimile transmission, when transmission is confirmed, in
each case addressed as follows:
if to the Company:
The AES Corporation
1001 North 19th Street
Arlington, VA 22209
Telecopy: (703) 528-4510
Attention: General Counsel
if to the Trustee:
The First National Bank of Chicago
One First National Bank Plaza
Chicago, IL 60670-0126
Telecopy: (312) 407-1708
Attention: Corporate Trust Services Division
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The Company or the Trustee by written notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication shall be sufficiently given to Holders of any
Unregistered Securities, by publication at least once in an Authorized Newspaper
in The City of New York, or with respect to any Security the interest on which
is based on the offered quotations in the interbank Eurodollar market for dollar
deposits at least once in an Authorized Newspaper in London, and by mailing to
the Holders thereof who have filed their names and addresses with the Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act at such addresses as
were so furnished to the Trustee and to Holders of Registered Securities by
mailing to such Holders at their addresses as they shall appear on the Security
Register. Notice mailed shall be sufficiently given if so mailed within the time
prescribed. Copies of any such communication or notice to a Holder shall also be
mailed to the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. Except as
otherwise provided in this Indenture, if a notice or communication is mailed in
the manner provided in this Section 10.2, it is duly given, whether or not the
addressee receives it.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case it shall be impracticable to give notice as herein contemplated,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 10.3. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating to
the proposed action have been complied with; and
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(ii) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.4. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or opinion has
read such covenant or condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination or
investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether or not, in the opinion of each such person,
such condition or covenant has been complied with; provided, however, that,
with respect to matters of fact, an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 10.5. Evidence of Ownership. The Company, the Trustee and any agent
of the Company or the Trustee may deem and treat the Holder of any Unregistered
Security and the Holder of any coupon as the absolute owner of such Unregistered
Security or coupon (whether or not such Unregistered Security or coupon shall be
overdue) for the purpose of receiving payment thereof or on account thereof and
for all other purposes, and neither the Company, the Trustee, nor any agent of
the Company or the Trustee shall be affected by any notice to the contrary. The
fact of the holding by any Holder of an Unregistered Security, and the
identifying number of such Security and the date of his holding the same, may be
proved by the production of such Security or by a certificate executed by any
trust company, bank, banker or recognized securities dealer wherever situated
satisfactory to the Trustee, if such certificate shall be deemed by the Trustee
to be satisfactory. Each such certificate shall be dated and shall state that on
the date thereof a Security bearing a specified identifying number was deposited
with or exhibited to such trust company, bank, banker or recognized securities
dealer by the person named in such
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certificate. Any such certificate may be issued in respect of one or more
Unregistered Securities specified therein. The holding by the person named in
any such certificate of any Unregistered Securities specified therein shall be
presumed to continue for a period of one year from the date of such certificate
unless at the time of any determination of such holding (1) another certificate
bearing a later date issued in respect of the same Securities shall be produced
or (2) the Security specified in such certificate shall be produced by some
other Person, or (3) the Security specified in such certificate shall have
ceased to be outstanding. Subject to Article 7, the fact and date of the
execution of any such instrument and the amount and numbers of Securities held
by the Person so executing such instrument may also be proven in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
any other manner which the Trustee may deem sufficient.
The Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the person in whose name any Registered Security shall be
registered upon the Security Register for such series as the absolute owner of
such Registered Security (whether or not such Registered Security shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the Principal of and,
subject to the provisions of this Indenture, interest on such Registered
Security and for all other purposes; and neither the Company nor the Trustee nor
any agent of the Company or the Trustee shall be affected by any notice to the
contrary.
SECTION 10.6. Rules by Trustee, Paying Agent or Registrar. The Trustee may
make reasonable rules for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 10.7. Payment Date Other Than a Business Day. If any date for
payment of Principal or interest on any Security shall not be a Business Day at
any place of payment, then payment of Principal of or interest on such Security,
as the case may be, need not be made on such date, but may be made on the next
succeeding Business Day at any place of payment with the same force and effect
as if made on such date and no interest shall accrue in respect of such payment
for the period from and after such date.
SECTION 10.8. Governing Law. The laws of the State of New York shall govern
this Indenture and the Securities.
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SECTION 10.9. No Adverse Interpretation of Other Agreements. This Indenture
may not be used to interpret another indenture or loan or debt agreement of the
Company or any Subsidiary of the Company. Any such indenture or agreement may
not be used to interpret this Indenture.
SECTION 10.10. Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 10.11. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 10.12. Separability. In case any provision in this Indenture or in
the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 10.13. Table of Contents, Headings, Etc. The Table of Contents and
headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms and provisions hereof.
SECTION 10.14. Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture or any indenture
supplemental hereto, or in any Security or any coupons appertaining thereto, or
because of any indebtedness evidenced thereby, shall be had against any
incorporator, as such or against any past, present or future stockholder,
officer, director or employee, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities and the
coupons appertaining thereto by the holders thereof and as part of the
consideration for the issue of the Securities and the coupons appertaining
thereto.
SECTION 10.15. Judgment Currency. The Company agrees, to the fullest extent
that it may effectively do so under applicable law, that (a) if for the purpose
of obtaining judgment in any court it is necessary to convert the sum due in
respect of the Principal of or interest on the Securities of
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any series (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Trustee could purchase
in The City of New York the Required Currency with the Judgment Currency on the
day on which final unappealable judgment is entered, unless such day is not a
Business Day, then, to the extent permitted by applicable law, the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the Business Day preceding the day on
which final unappealable judgment is entered and (b) its obligations under this
Indenture to make payments in the Required Currency (i) shall not be discharged
or satisfied by any tender, or any recovery pursuant to any judgment (whether or
not entered in accordance with subsection (a)), in any currency other than the
Required Currency, except to the extent that such tender or recovery shall
result in the actual receipt, by the payee, of the full amount of the Required
Currency expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose of
recovering in the Required Currency the amount, if any, by which such actual
receipt shall fall short of the full amount of the Required Currency so
expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture.
ARTICLE 11
SUBORDINATION OF SECURITIES
SECTION 11.1. Agreement to Subordinate. The Company covenants and agrees,
and each Holder of Securities issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Securities shall be issued subject to
the provisions of this Article; and each person holding any Security, whether
upon original issue or upon transfer, assignment or exchange thereof accepts and
agrees that the Principal of and interest on all Securities issued hereunder
shall, to the extent and in the manner herein set forth, be subordinated and
subject in right to the prior payment in full of all Senior and Subordinated
Debt.
SECTION 11.2. Payments to Securityholders. No payments on account of
Principal of, Change of Control purchase price, or interest on the Securities
shall be made if at the time of such payment or immediately after giving effect
thereto
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there shall exist a default in any payment with respect to any Senior and
Subordinated Debt, and such event of default shall not have been cured or waived
or shall not have ceased to exist. In addition, during the continuance of any
other event of default (other than a payment default) with respect to Designated
Senior and Subordinated Debt pursuant to which the maturity thereof may be
accelerated, from and after the date of receipt by the Trustee of written notice
from the holders of such Designated Senior and Subordinated Debt or from an
agent of such holders, no payments on account of Principal, Change of Control
purchase price, or interest in respect of the Securities may be made by the
Company for a period ("Payment Blockage Period") commencing on the date of
delivery of such notice and ending 179 days thereafter (unless such Payment
Blockage Period shall be terminated by written notice to the Trustee from the
holders of such Designated Senior and Subordinated Debt or from an agent of such
holders, or such event of default has been cured or waived or has ceased to
exist). Only one Payment Blockage Period may be commenced with respect to the
Securities during any period of 360 consecutive days. No event of default which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior and Subordinated Debt
initiating such Payment Blockage Period shall be or be made the basis for the
commencement of any subsequent Payment Blockage Period by the holders of such
Designated Senior and Subordinated Debt, unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
Upon any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshalling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings of the Company, all amounts due or
to become due upon all Senior and Subordinated Debt shall first be paid in full,
in cash or cash equivalents, or payment thereof provided for in accordance with
its terms, before any payment is made on account of the Principal of, Change of
Control purchase price, or interest on the indebtedness evidenced by the
Securities, and upon any such liquidation, dissolution, winding up,
receivership, reorganization, assignment, marshalling or proceeding, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, to which the Holders of the Securities or the
Trustee under this Indenture would be entitled, except for the provisions
hereof, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the
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Trustee under this Indenture if received by them or it, directly to the holders
of Senior and Subordinated Debt (pro rata to such holders on the basis of the
respective amounts of Senior and Subordinated Debt held by such holders) or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior and Subordinated Debt in full
(including, without limitation, except to the extent, if any, prohibited by
mandatory provisions of law, post-petition interest, in any such proceedings),
after giving effect to any concurrent payment or distribution to or for the
holders of Senior and Subordinated Debt, before any payment or distribution is
made to the holders of the indebtedness evidenced by the Securities or to the
Trustee under this Indenture.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee under this Indenture or the holders of the Securities before all Senior
and Subordinated Debt is paid in full or provision is made for such payment in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of such
Senior and Subordinated Debt or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior and Subordinated Debt may have been issued, as
their respective interests may appear, for application to the payment of all
Senior and Subordinated Debt remaining unpaid until all such Senior and
Subordinated Debt shall have been paid in full in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior and Subordinated Debt.
For purposes of this Article, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of arrangement, reorganization or readjustment, the payment of which
is subordinated (at least to the extent provided in this Article with respect to
the Securities) to the payment of all Senior and Subordinated Debt which may at
the time be outstanding; provided, that (i) the Senior and Subordinated Debt is
assumed by the new corporation, if any, resulting from any such arrangement,
reorganization or readjustment, and (ii) the rights of the holders of the Senior
and Subordinated Debt are not, without the consent of such holders, altered by
such
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<PAGE>
arrangement, reorganization or readjustment. The consolidation of the Company
with, or the merger of the Company into, another corporation or the liquidation
or dissolution of the Company following the conveyance or transfer of its
property as an entirety, or substantially as an entirety, to another corporation
upon the terms and conditions provided in Article 5 shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article 5.
Nothing in this Section shall apply to claims of, or payments to, the Trustee
under or pursuant to Article 7, except as provided therein. This Section shall
be subject to the further provisions of Section 11.5.
SECTION 11.3. Subrogation of Securities. Subject to the payment in full of
all Senior and Subordinated Debt, the holders of the Securities shall be
subrogated to the rights of the holders of Senior and Subordinated Debt to
receive payments or distributions of cash, property or securities of the Company
applicable to the Senior and Subordinated Debt until the principal of and
interest on the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior and
Subordinated Debt of any cash, property or securities to which the holders of
the Securities or the Trustee on their behalf would be entitled except for the
provisions of this Article, and no payment over pursuant to the provisions of
this Article to the holders of Senior and Subordinated Debt by holders of the
Securities or the Trustee on their behalf shall, as between the Company, its
creditors other than holders of Senior and Subordinated Debt and the holders of
the Securities, be deemed to be a payment by the Company to or on account of the
Senior and Subordinated Debt; and no payments or distributions of cash, property
or securities to or for the benefit of the Securityholders pursuant to the
subrogation provision of this Article, which would otherwise have been paid to
the holders of Senior and Subordinated Debt shall be deemed to be a payment by
the Company to or for the account of the Securities. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the holders of the Securities, on the one hand,
and the holders of the Senior and Subordinated Debt, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior and Subordinated Debt, and the holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Securities the
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<PAGE>
principal of and interest on the Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the holders of the Securities and creditors of the
Company other than the holders of the Senior and Subordinated Debt, nor shall
anything herein or therein prevent the holder of any Security or the Trustee on
his behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior and Subordinated Debt in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such liquidation,
dissolution, winding up, receivership, reorganization, assignment or marshalling
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, delivered to the Trustee or to the holders of the Securities, for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior and Subordinated Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 11.4. Authorization by Securityholders. Each holder of a Security
by his acceptance thereof authorizes the Trustee in his behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes.
SECTION 11.5. Notice to Trustee. The Company shall give prompt written
notice to the Trustee and to any paying agent of any fact known to the Company
which would prohibit the making of any payment of moneys to or by the Trustee or
any paying agent in respect of the Securities pursuant to the provisions of this
Article. Regardless of anything to the contrary contained in this Article or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior and Subordinated Debt or of any default or event of
default with respect to any Senior and Subordinated Debt or of any other facts
which would prohibit the making of any payment of moneys to or by the Trustee,
unless and until the Trustee shall have received notice in writing at its
prin-
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<PAGE>
cipal Corporate Trust Office to that effect signed by an officer of the Company,
or by a holder or agent of a holder of Senior and Subordinated Debt who shall
have been certified by the Company or otherwise established to the reasonable
satisfaction of the Trustee to be such holder or agent, or by the trustee under
any indenture pursuant to which Senior and Subordinated Debt shall be
outstanding, and, prior to the receipt of any such written notice, the Trustee
shall, subject to Sections 7.1 and 7.2, be entitled to assume that no such facts
exist; provided that if on a date at least three Business Days prior to the date
upon which by the terms hereof any such moneys shall become payable for any
purpose (including, without limitation, the payment of the principal of, or
interest on any Security) the Trustee shall not have received with respect to
such moneys the notice provided for in this Section, then, regardless of
anything herein to the contrary, the Trustee shall have full power and authority
to receive such moneys and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date.
Regardless of anything to the contrary herein, nothing shall prevent (a)
any payment by the Company or the Trustee to the Securityholders of amounts in
connection with a redemption of Securities if (i) notice of such redemption has
been given pursuant to Article 3 prior to the receipt by the Trustee of written
notice as aforesaid, and (ii) such notice of redemption is given not earlier
than 60 days before the redemption date, or (b) any payment by the Trustee to
the Securityholders of amounts deposited with it pursuant to Section 8.1.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a person representing himself to be a holder of Senior and
Subordinated Debt (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior and Subordinated Debt or a trustee
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any person
as a holder of Senior and Subordinated Debt to participate in any payment or
distribution pursuant to this Article, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior and Subordinated Debt held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article, and if such
evidence is not furnished the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
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<PAGE>
SECTION 11.6. Trustee's Relation to Senior and Subordinated Debt. The
Trustee and any agent of the Company or the Trustee shall be entitled to all the
rights set forth in this Article with respect to any Senior and Subordinated
Debt which may at any time be held by it in its individual or any other capacity
to the same extent as any other holder of Senior and Subordinated Debt and
nothing in this Indenture shall deprive the Trustee or any such agent, of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.7.
With respect to the holders of Senior and Subordinated Debt, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior and Subordinated Debt shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior and Subordinated Debt and,
subject to the provisions of Sections 7.1 and 7.2, the Trustee shall not be
liable to any holder of Senior and Subordinated Debt if it shall pay over or
deliver to holders of Securities, the Company or any other person moneys or
assets to which any holder of Senior and Subordinated Debt shall be entitled by
virtue of this Article or otherwise.
SECTION 11.7. No Impairment of Subordination. No right of any
present or future holder of any Senior and Subordinated Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with.
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
(SEAL) THE AES CORPORATION
Attest: as the Company
By:
- --------------------------------------- ------------------------------
Name:
Title:
(SEAL) THE FIRST NATIONAL BANK OF
Attest: OF CHICAGO
By:
- --------------------------------------- ------------------------------
Name:
Title:
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================================================================================
THE AES CORPORATION
AND
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
--------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 10, 1998
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of August 10, 1998
--------------------
4.50% Convertible Junior Subordinated Debentures
due 2005
================================================================================
<PAGE>
The First Supplemental INDENTURE, dated as of this 10th day of August, 1998
(the "First Supplemental Indenture"), between THE AES CORPORATION, a corporation
duly organized and existing under the laws of the State of Delaware (hereinafter
sometimes referred to as the "Company"), and THE FIRST NATIONAL BANK OF CHICAGO,
a national banking association, as trustee (hereinafter sometimes referred to as
the "Trustee") under the Junior Subordinated Indenture dated as of August 10,
1998 between the Company and the Trustee (the "Indenture");
WHEREAS, the Company executed and delivered the Indenture to the Trustee to
provide for the future issuance of its junior subordinated securities (the
"Debentures"), said Debentures to be issued from time to time in series as might
be determined by the Company under the Indenture, in an unlimited aggregate
principal amount which may be authenticated and delivered thereunder as in the
Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of its Debentures to be known as
its 4.50% Convertible Junior Subordinated Debentures due 2005 (said series being
hereinafter referred to as the "Series A Convertible Debentures"), the form and
substance of such Series A Convertible Debentures and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture and this First
Supplemental Indenture; and
WHEREAS, the Company desires and has requested the Trustee to join with it
in the execution and delivery of this First Supplemental Indenture, and all
requirements necessary to make this First Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Series A Convertible
Debentures, when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company have been performed and fulfilled,
and the execution and delivery hereof have been in all respects duly authorized;
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Series A Convertible Debentures by the holders thereof, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Series A Convertible Debentures and the terms, provisions and conditions
thereof, the Company covenants and agrees with the Trustee as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. TERMS DEFINED IN THE INDENTURE.
Each capitalized term used not but defined in this First Supplemental
Indenture shall have the meaning assigned to such term in the Indenture.
SECTION 1.2. CERTAIN DEFINITIONS.
The following definitions are hereby added to the definitions contained in
Section 1.1 of the Indenture, but only with respect to the Series A Convertible
Debentures issued in accordance with the provisions hereof:
"Common Stock" means the Common Stock, $.01 par value, of the Company.
"Repurchase Event" means the occurrence of a Change in Control or a
Termination of Trading.
"Senior Subordinated Debt" means Debt which is subordinated in right of
payment only to Debt which is not subordinated and includes, without limitation,
the Company's 8.375% Senior Subordinated Debentures due 2027, 8.50% Senior
Subordinated Notes due 2007, 8.375% Senior Subordinated Notes due 2007 and
10.25% Senior Subordinated Notes due 2006.
"Termination of Trading" occurs if the Common Stock (or if the Debentures
are not then convertible into Common Stock, any other common stock into which
the Debentures are then convertible) is neither listed for trading on a U.S.
national securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States.
"Trading Date" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
The following terms are defined in the places indicated:
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Term Defined in Section
---- ------------------
Closing Price 5.4
conversion price 5.1
Current Market Price 5.4
Purchased Shares 5.4
ARTICLE TWO
THE SERIES A CONVERTIBLE DEBENTURES
SECTION 2.1. FORM.
The Series A Convertible Debentures shall be substantially in the form of
Exhibit A hereto, which is a part of this First Supplemental Indenture, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by the Indenture and this First
Supplemental Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers of the Company executing
such Series A Convertible Debentures, as evidenced by their execution of the
Series A Convertible Debentures.
The Series A Convertible Debentures will initially be issued as Registered
Global Securities.
The Company initially appoints The Depository Trust Company and the Trustee
to act as Depositary and Securities Custodian, respectively, with respect to the
Series A Convertible Debentures.
The Company initially appoints the Trustee to act as Paying Agent and
Registrar with respect to the Series A Convertible Debentures.
SECTION 2.2. DESIGNATION AND AMOUNT.
(a) The Series A Convertible Debentures shall be entitled the "4.50%
Convertible Junior Subordinated Debentures due 2005" of the Company.
(b) The Trustee shall authenticate and deliver Series A Convertible
Debentures for original issue in an aggregate principal amount of $150,000,000;
provided, however, that in the event the Company sells any Series A Convertible
Deben-
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tures pursuant to the over-allotment option (the "Over-Allotment Option")
granted pursuant to the Underwriting Agreement dated August 4, 1998 between the
Company, Smith Barney Inc., J.P. Morgan Securities, Inc., Donaldson, Lufkin &
Jenrette Securities Corporation, Morgan Stanley & Co. Incorporated, PaineWebber
Incorporated and C.E. Unterberg, Towbin, then the Trustee shall authenticate and
deliver Series A Convertible Debentures for original issue in an aggregate
principal amount of $150,000,000 plus up to $22,500,000 aggregate principal
amount of Series A Convertible Debentures sold pursuant to the Over-Allotment
Option. The aggregate principal amount of Series A Convertible Debentures that
may be authenticated and delivered under the Indenture may not exceed the amount
set forth in the foregoing sentence, subject to the proviso therein, except for
Series A Convertible Debentures that may be authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Series A
Convertible Debentures pursuant to Sections 2.7, 2.8, 2.10, 3.3 or 9.4 of the
Indenture and Section 4.1 of this First Supplemental Indenture.
(c) The Company may not issue new Debentures to replace Debentures that it
has paid or delivered to the Trustee for cancellation or that any Holder has
converted pursuant to Article Five.
SECTION 2.3. INTEREST.
Interest on the Series A Convertible Debentures shall be payable on the
dates and in the manner provided for in the form of the Series A Convertible
Debenture attached hereto as Exhibit A.
SECTION 2.4. DENOMINATIONS.
The Debentures shall be Registered Securities in denominations of $1,000 or
any integral multiple thereof.
SECTION 2.5. PLACE OF PAYMENT.
The place of payment for the Series A Convertible Debentures shall be the
Borough of Manhattan, The City of New York. So long as the Series A Convertible
Debentures are in the form of Registered Global Securities, the Company agrees
that payments of interest on, and any portion of the principal of, the Holder's
Series A Convertible Debenture shall be made by the Paying Agent, upon receipt
from the Company of immediately available funds, directly to the Depositary (by
Federal funds wire transfer).
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<PAGE>
ARTICLE THREE
OPTIONAL REDEMPTION OF THE SERIES A CONVERTIBLE DEBENTURES
SECTION 3.1. OPTIONAL REDEMPTION.
The Series A Convertible Debentures may be redeemed at the election of the
Company as provided by the terms of the Series A Convertible Debentures, as a
whole or from time to time in part, at the times and at the Redemption Prices
specified in the form of the Series A Convertible Debentures attached hereto as
Exhibit A, together with any applicable accrued interest to the Redemption Date.
ARTICLE FOUR
ADDITIONAL COVENANTS APPLICABLE TO
SERIES A CONVERTIBLE DEBENTURES
SECTION 4.1. REPURCHASE EVENT.
(a) In the event of a Repurchase Event, each Holder of the Series A
Convertible Debentures shall have, subject to Article 11 of the Indenture, the
right, at such Holder's option, to require that the Company repurchase all or
any part of such Holder's Series A Convertible Debentures at a repurchase price
in cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase in accordance with this Section 4.1.
(b) Within 30 days following any Repurchase Event, the Company shall mail a
notice to each Holder of the Series A Convertible Debentures at its last
registered address with a copy to the Trustee stating:
(1) that a Repurchase Event has occurred and that such Holder has the
right to require the Company to repurchase such Holder's Series A
Convertible Debentures at a repurchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of repurchase (the "Repurchase Offer");
(2) the circumstances and relevant facts regarding such Repurchase
Event (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Repurchase Event);
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<PAGE>
(3) the repurchase date (which shall be not earlier than 30 days or
later than 60 days from the date such notice is mailed) (the "Repurchase
Date");
(4) that any Series A Convertible Debenture not tendered will continue
to accrue interest;
(5) that any Series A Convertible Debenture accepted for payment
pursuant to the Repurchase Offer shall cease to accrue interest after the
Repurchase Date;
(6) that Holders electing to have a Series A Convertible Debenture
purchased pursuant to a Repurchase Offer will be required to surrender the
Series A Convertible Debenture, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Series A Convertible Debenture
completed, to the Paying Agent at the address specified in the notice prior
to the close of business on the Repurchase Date;
(7) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day (or such shorter period as may be required by applicable law)
preceding the Repurchase Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Series A Convertible
Debentures the Holder delivered for purchase, and a statement that such
Holder is withdrawing his election to have such Series A Convertible
Debentures purchased; and
(8) that Holders which elect to have their Series A Convertible
Debentures purchased only in part will be issued new Series A Convertible
Debentures in a principal amount equal to the unpurchased portion of the
Series A Convertible Debenture surrendered.
(c) On the Repurchase Date, the Company shall:
(i) accept for payment Series A Convertible Debentures or
portions thereof tendered pursuant to the Repurchase Offer;
(ii) deposit by 10:00 a.m., New York City time, with the Trustee
money sufficient to pay the purchase price of all Series A Convertible
Debentures or portions thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee Series A
Convertible Debentures so accepted
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together with an Officers' Certificate identifying the Series A
Convertible Debentures or portions thereof tendered to the Company.
The Trustee shall promptly mail to the Holders of the Series A Convertible
Debentures so accepted payment in an amount equal to the purchase price, and
promptly authenticate and make available for delivery to such Holders a new
Series A Convertible Debenture in a principal amount equal to any unpurchased
portion of the Series A Convertible Debenture surrendered. The Company will
publicly announce the results of the Repurchase Offer on or as soon as
practicable after the Repurchase Date.
The Company shall comply with all applicable tender offer rules under the
Exchange Act, including, without limitation, Rules 13e-4 and 14e-1 under the
Exchange Act, as then in effect with respect to any such Repurchase Offer.
SECTION 4.2. LIMITATION ON ADDITIONAL TIERS OF JUNIOR SUBORDINATED DEBT.
The Company will not incur or suffer to exist any Debt, other than Debt
evidenced by the Series A Convertible Debentures, that is subordinated in right
of payment to any Senior Subordinated Debt unless such Debt, by its terms or the
terms of the instrument creating or evidencing it, is pari passu with, or
subordinated in right of payment to, Series A Convertible Debentures.
ARTICLE FIVE
CONVERSION OF DEBENTURES
The Series A Convertible Debentures shall be convertible into shares of
Common Stock upon the following terms and conditions:
SECTION 5.1. CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article Five, at
the option of the Holder thereof, any Series A Convertible Debentures or any
portion of the principal amount thereof which is $1,000 or an integral multiple
of $1,000 may be converted at the principal amount thereof, or of such portion
thereof, into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100 of a
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<PAGE>
share) of Common Stock at the conversion price, determined as hereinafter
provided, in effect at the time of conversion. Such conversion right shall
expire at the close of business on August 15, 2005. In case Series A Convertible
Debentures or a portion thereof is called for redemption at the election of the
Company, such conversion right in respect of the Series A Convertible Debentures
shall expire at the close of business on the second business day preceding the
Redemption Date.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $54.00 per
share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in this Article Five.
SECTION 5.2. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any Series A
Convertible Debenture to be converted shall surrender such Series A Convertible
Debenture, duly endorsed or assigned to the Company or in blank, at any office
or agency of the Company maintained for that purpose pursuant to Section 4.2 of
the Indenture, accompanied by written notice of conversion in the form provided
on the Series A Convertible Debenture (or such other notice as is acceptable to
the Company) at such office or agency that the Holder elects to convert such
Series A Convertible Debenture or, if less than the entire principal amount
thereof is to be converted, the portion thereof to be converted. Series A
Convertible Debentures issued as Registered Global Securities will be converted
in accordance with the standing instructions and procedures of the Depositary
and its participants. Series A Convertible Debentures surrendered for conversion
during the period from the close of business on any Regular Record Date through
and including the next Interest Payment Date shall (except in the case of Series
A Convertible Debentures or portions thereof which have been called for
redemption on a Redemption Date occurring on or before such Interest Payment
Date) be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Series A Convertible Debentures
being surrendered for conversion. Subject to the provisions of Section 2.13 of
the Indenture relating to the payment of defaulted interest by the Company, the
interest payment with respect to a Series A Convertible Debenture called for
redemption on a Redemption Date during the period from the close of business on
any Regular Record Date through and including the next Interest Payment Date
shall be payable on such Interest Payment Date to the Holder of such Series A
Convertible Debenture at the close of business on such
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Regular Record Date notwithstanding the conversion of such Series A Convertible
Debenture after such Regular Record Date and on or prior to such Interest
Payment Date, and the Holder converting such Series A Convertible Debenture need
not include a payment of such interest payment amount upon surrender of such
Series A Convertible Debenture for conversion. Except as provided in the
preceding sentence, no payment or adjustment shall be made upon any conversion
on account of any interest accrued on the Series A Convertible Debentures
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Series A Convertible Debentures shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of such
Series A Convertible Debentures for conversion in accordance with the foregoing
provisions, and at such time the rights of the Holders of such Series A
Convertible Debentures as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 5.3.
In the case of any Series A Convertible Debenture which is converted in
part only, upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new Series A Convertible Debenture or Series A Convertible Debentures of
authorized denominations in aggregate principal amount equal to the unconverted
portion of the principal amount of such Series A Convertible Debenture.
SECTION 5.3. FRACTIONS OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion of
Series A Convertible Debentures. If more than one Series A Convertible Debenture
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Series A Convertible
Debentures (or specified portions thereof) so surrendered. Instead of any
fractional share of Common Stock which would otherwise be issuable upon
conversion of any Series A Convertible Debenture or Series A Convertible
Debentures (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction
9
<PAGE>
in an amount equal to such fraction multiplied by the Closing Price per share of
Common Stock (consistent with Section 5.4(h) below) at the close of business on
the day of conversion (or, if such day is not a Trading Day, on the Trading Day
immediately preceding such day).
SECTION 5.4. ADJUSTMENT OF CONVERSION PRICE.
(a) In case the Company shall pay or make a dividend or other distribution
in Common Stock on any class of capital stock of the Company, the conversion
price in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this paragraph (a),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(b) In case the Company shall issue rights or warrants to all holders of
its Common Stock (not being available on an equivalent basis to Holders of the
Series A Convertible Debentures upon conversion) entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or purchase shares of Common Stock at a price per share less than the Current
Market Price on the date fixed for the determination of stockholders entitled to
receive such rights or warrants, the conversion price in effect at the opening
of business on the day following the date fixed for such determination shall be
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such re-
10
<PAGE>
duction to become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of this
paragraph (b), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company will not issue any rights, options or
warrants in respect of shares of Common Stock held in the treasury of the
Company. If at the end of the period during which such rights or warrants are
exercisable not all such rights or warrants shall have been exercised, the
conversion price shall be immediately readjusted to what it would have been
based upon the number of additional shares of Common Stock actually issued.
(c) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness, shares of any class
of its capital stock or other assets (including securities, but excluding any
cash, rights or warrants referred to in paragraph (b) of this Section 5.4, any
dividend or distribution paid exclusively in cash referred to in paragraph (e)
of this Section 5.4, any dividend or distribution referred to in paragraph (a)
of this Section 5.4 and any merger or consolidation to which Section 5.11
applies), the conversion price shall be adjusted so that the same shall equal
the price determined by multiplying the conversion price in effect immediately
prior to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of which the
numerator shall be the Current Market Price on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) of the portion of the assets, shares or
evidences of indebtedness so distributed applicable to one share of Common Stock
and the denominator shall be such Current Market Price, such adjustment
11
<PAGE>
to become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution.
(e) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
merger or consolidation to which Section 5.11 applies or as part of a
distribution referred to in paragraph (d) of this Section 5.4) in an aggregate
amount that, combined together with (1) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (e) has been made excluding
cash distributed as part of a distribution referred to in paragraph (d) of this
Section 5.4, and (2) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) of consideration payable in respect of any
tender offer by the Company or any of its Subsidiaries for all or any portion of
the Common Stock concluded within the 12 months preceding the date of payment of
such distribution and in respect of which no adjustment pursuant to paragraph
(f) of this Section 5.4 has been made, exceeds 15% of the product of the Current
Market Price on the date for the determination of holders of shares of Common
Stock entitled to receive such distribution times the number of shares of Common
Stock outstanding on such date, then, and in each such case, immediately after
the close of business on such date for determination, the conversion price shall
be reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the close of business on the
date fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
Current Market Price on the date fixed for such determination less an amount
equal to the quotient of (x) the excess of such combined amount over such 15%
and (y) the number of shares of Common Stock outstanding on such date for
determination and (ii) the denominator of which shall be equal to the Current
Market Price on such date for determination.
(f) In case a tender offer made by the Company or any Subsidiary for all or
any portion of the Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall require the payment to stockholders (based on
the acceptance (up to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclu-
12
<PAGE>
sive and described in a Board Resolution) that combined together with (1) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender offer, of consideration payable
in respect of any other tender offer, by the Company or any Subsidiary for all
or any portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this paragraph (f) has been made and (2) the aggregate amount of any
distributions to all holders of the Company's Common Stock made exclusively in
cash within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to paragraph (e) of this Section 5.4 has
been made, exceeds 15% of the product of the Current Market Price as of the last
time (the "Expiration Time") tenders could have been made pursuant to such
tender offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time, then, and in
each such case, immediately prior to the opening of business on the day after
the date of the Expiration Time, the conversion price shall be adjusted so that
the same shall equal the price determined by multiplying the conversion price in
effect immediately prior to close of business on the date of the Expiration Time
by a fraction (i) the numerator of which shall be equal to (A) the product of
(I) the current market price per share of the Common Stock (determined as
provided in paragraph (h) of this Section 5.4) on the date of the Expiration
Time and (II) the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time less (B) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the tender offer) of Purchased Shares, and (ii) the denominator of
which shall be equal to the product of (A) the current market price per share of
the Common Stock (determined as provided in paragraph (h) of this Section 5.4)
as of the Expiration Time and (B) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration Time less the
number of all shares validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted up to any such maximum, being referred to as
the "Purchased Shares").
(g) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 5.11 applies) shall be deemed to
involve (i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassifi-
13
<PAGE>
cation shall be deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and the "date fixed for such
determination" within the meaning of paragraph (d) of this Section 5.4), and
(ii) a subdivision or combination, as the case may be, of the number of shares
of Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of paragraph
(c) of this Section 5.4).
(h) For the purpose of any computation under paragraphs (b), (d), (e) and
(f) of this Section 5.4, the current market price per share of Common Stock (the
"Current Market Price") on any date shall be deemed to be the average of the
daily Closing Prices for the 5 consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. The "Closing Price" for
each Trading Day shall be the reported last sale price regular way or, in case
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on The Nasdaq National Market, or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or The Nasdaq National Market, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that purpose.
For purposes of this paragraph, the term "'ex' date", when used with respect to
any issuance or distribution, shall mean the first date on which the Common
Stock trades regular way on such exchange or in such market without the right to
receive such issuance or distribution.
(i) No adjustment in the conversion price shall be required to be made
until cumulative adjustments (plus any adjustments not previously made by reason
of this paragraph (i)) amount to at least 1% of the conversion price, as last
adjusted; provided, however, that any adjustments which by reason of this
paragraph (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjust-
14
<PAGE>
ment. All calculations under this paragraph (i) shall be made to the nearest
cent.
(j) In addition to those required by paragraphs (a), (b), (c), (d), (e) and
(f) of this Section 5.4, the Company from time to time may make such reductions
in the conversion price by any amount, (i) to the extent permitted by law for
any period of at least 20 days, in which case the Company shall give 15 days
notice of such decrease and (ii) to such extent as it considers to be advisable
in order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of shares of Common
Stock or, if that is not possible, to diminish any income taxes that are
otherwise payable because of such event. The Company shall have the power to
resolve any ambiguity or correct any error in this paragraph (j) and its actions
in so doing shall be final and conclusive.
SECTION 5.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 5.4 and shall prepare an Officer's Certificate
setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate
shall forthwith be filed at each office or agency maintained for the
purpose of conversion of Series A Convertible Debentures pursuant to
Section 4.2 of the Indenture; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required,
and as soon as practicable after it is required, such notice shall be
mailed by the Company to all Holders of Series A Convertible Debentures at
their last addresses as they shall appear in the Security Register.
SECTION 5.6. NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than in cash out of its earned
surplus; or
15
<PAGE>
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding shares of Common
Stock), or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any stockholders of the
Company is required, or of the sale or transfer of all or substantially all
of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the Company's outstanding Common Stock (or shall amend
any such tender offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Series A Convertible Debentures pursuant to Section
4.2 of the Indenture, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Security Register, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined, or (y) the date on which such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation, winding up or tender offer is expected to become
effective, and the date or dates as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation, winding up or tender offer. Neither the failure to
give such notice nor any defect therein shall affect the legality or validity of
the proceedings described in paragraphs (a) through (d) of this Section 5.6. If
at the time the Trustee shall not be the conversion agent, a copy of such notice
shall also forthwith be filed by the Company with the Trustee.
16
<PAGE>
SECTION 5.7. COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Series A Convertible Debentures, the full number of shares of
Common Stock then issuable upon the conversion of all outstanding Series A
Convertible Debentures.
SECTION 5.8. TAXES ON CONVERSIONS.
The Company will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of Series A
Convertible Debentures pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that of
the Holder of the Series A Convertible Debenture or Series A Convertible
Debentures to be converted, and no such issue or delivery shall be made unless
and until the Person requesting such issue has paid to the Company the amount of
any such tax, or has established to the satisfaction of the Company that such
tax has been paid.
SECTION 5.9. COVENANT AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Series A Convertible Debentures will upon issue be fully paid
and nonassessable and, except as provided in Section 5.8, the Company will pay
all taxes, liens and charges with respect to the issue thereof.
SECTION 5.10. CANCELLATION OF CONVERTED SERIES A CONVERTIBLE DEBENTURES.
All Series A Convertible Debentures delivered for conversion shall be
delivered to the Trustee to be canceled by or at the direction of the Trustee,
which shall dispose of the same as provided in Section 2.11 of the Indenture.
SECTION 5.11. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS.
In case of any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any sale or transfer of all or substantially all of the assets of the
Company, the Person formed by such consolida-
17
<PAGE>
tion or resulting from such merger or which acquires such assets, as the case
may be, shall execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Series A Convertible Debenture then
outstanding shall have the right thereafter, during the period such Series A
Convertible Debenture shall be convertible as specified in Section 5.1, to
convert such Series A Convertible Debenture only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock of the
Company into which such Series A Convertible Debenture might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming such
holder of Common Stock of the Company is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be ("Constituent
Person"), or an Affiliate of a Constituent Person, and failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer
(provided that if the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by others than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then for the purpose of this Article
Five the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares. Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article Five. The above provisions of this
Article Five shall similarly apply to successive consolidations, mergers, sales
or transfers.
SECTION 5.12. TRUSTEE'S DISCLAIMER.
The Trustee has no duty to determine when an adjustment under this Article
Five should be made, how it should be made or what it should be. The Trustee
makes no representation as to the validity or value of any securities or assets
issued upon conversion of Series A Convertible Debentures. The Trustee shall not
be responsible for the Company's failure to comply with this Article Five.
18
<PAGE>
ARTICLE SIX
MISCELLANEOUS PROVISIONS
SECTION 6.1. RATIFICATION.
The Indenture, as supplemented by this First Supplemental Indenture, is in
all respects ratified and confirmed. This First Supplemental Indenture shall be
deemed part of the Indenture in the manner and to the extent herein and therein
provided.
SECTION 6.2. COUNTERPARTS.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
THE AES CORPORATION
By:
-------------------------------
Name:
Title:
Attest:
By:
-------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:
-------------------------------
Name:
Title:
Attest:
By:
-------------------------------
Name:
Title:
20
<PAGE>
EXHIBIT A
(FORM OF FACE OF SERIES A CONVERTIBLE DEBENTURE)
[IF THE DEBENTURE IS TO BE A REGISTERED GLOBAL SECURITY, INSERT - This
Series A Convertible Debenture is a Registered Global Security within the
meaning of the Indenture hereinafter referred to and is registered in the name
of a Depositary or a nominee of a Depositary. This Series A Convertible
Debenture is exchangeable for Series A Convertible Debentures registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Series A
Convertible Debenture (other than a transfer of this Series A Convertible
Debenture as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Series A Convertible Debenture is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Series A Convertible Debenture issued is registered in the name
of Cede & Co. or such other name as requested by an authorized representative of
The Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede Co., has an interest herein.]
No. $ CUSIP NO.: 00130 HAN 5
4.50% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE DUE 2005
THE AES CORPORATION promises to pay
to or registered assigns the
principal sum of Dollars on
August 15, 2005.
Interest Payment Dates: February 15, August 15 and at maturity, commencing
February 15, 1999.
A-1
<PAGE>
Record Dates: February 1 or August 1, as the case may be, next preceding such
Interest Payment Date
By:____________________________
Authorized Signature
By:____________________________
Authorized Signature
Dated:
Certificate of Authentication
This is one of the 4.50% Convertible Junior Subordinated Debentures due
2005 referred to in the within-mentioned Indenture.
The First National Bank of
Chicago, as Trustee
By:____________________________
Authorized Signatory
A-2
<PAGE>
[FORM OF REVERSE OF SERIES A CONVERTIBLE DEBENTURE]
THE AES CORPORATION
4.50% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE DUE 2005
1. Interest. THE AES CORPORATION, a Delaware corporation (the "Company,"
which definition shall include any successor thereto in accordance with the
Indenture (as defined below)), promises to pay, until the principal hereof is
paid or made available for payment, interest on the principal amount set forth
on the reverse side hereof at a rate of 4.50% per annum. Interest on the Series
A Convertible Debentures will accrue from and including the most recent date to
which interest has been paid or, if no interest has been paid, from August 10,
1998 through but excluding the date on which interest is paid. Interest shall be
payable in arrears on February 15, August 15 and at the stated maturity (each an
"Interest Payment Date"), commencing February 15, 1999. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Series A
Convertible Debentures (except defaulted interest) to the Persons who are
registered Holders of Series A Convertible Debentures at the close of business
on February 1 and August 1 next preceding the Interest Payment Date. Holders
must surrender Series A Convertible Debentures to a Paying Agent to collect
principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. At the Company's option,
interest may be paid by check mailed to the registered address of the Holder of
this Series A Convertible Debenture.
3. Paying Agent and Registrar. Initially, The First National Bank of
Chicago (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice.
4. Indenture. The Company issued the Series A Convertible Debentures under
an Indenture dated as of August 10, 1998 between the Company and the Trustee as
supplemented by the first Supplemental Indenture dated as of August 10, 1998
between the Company and the Trustee (said Indenture, as so supplemented, the
"Indenture"). This Series A Convertible Deben-
A-3
<PAGE>
ture is one of an issue of Securities of the Company issued under the Indenture.
The terms of the Series A Convertible Debentures include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb) as amended from time to
time. The Series A Convertible Debentures are subject to all such terms, and
Series A Convertible Debentureholders are referred to the Indenture and such Act
for a statement of them. Capitalized terms used herein and not otherwise defined
have the meanings set forth in the Indenture. The Series A Convertible
Debentures are general unsecured obligations of the Company subordinated in
right of payment to all Senior and Subordinated Debt of the Company, limited in
aggregate principal amount to $150,000,000; provided, however, that in the event
the Company sells any Series A Convertible Debentures pursuant to the
over-allotment option (the "Over-Allotment Option") granted pursuant to the
Underwriting Agreement dated August 4, 1998 between the Company, Smith Barney
Inc., J.P. Morgan Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, PaineWebber Incorporated and
C.E. Unterberg, Towbin, then the Trustee shall authenticate and deliver Series A
Convertible Debentures for original issue in an aggregate principal amount of
$150,000,000 plus up to $22,500,000 aggregate principal amount of Series A
Convertible Debentures sold pursuant to the Over-Allotment Option. The Indenture
limits the ability of the Company and its Subsidiaries to incur additional tiers
of junior subordinated Debt.
5. Optional Redemption. The Series A Convertible Debentures are subject to
redemption, at the Company's option, in whole or from time to time in part, at
any time on or after August 20, 2001, upon not less than 30 nor more than 60
days' notice mailed to each holder of Series A Convertible Debentures to be
redeemed at its address appearing in the Security Register and prior to maturity
at the following Redemption Prices (expressed as percentages of the principal
amount) plus accrued interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due or
on Interest Payment Date that is on or prior to the Redemption Date).
If redeemed during the 12-month period beginning August 15 in the year
indicated, the Redemption Price shall be:
A-4
<PAGE>
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----
<S> <C>
2001................................................ 102.57%
2002................................................ 101.93%
2003................................................ 101.29%
</TABLE>
and after August 15, 2004 at a Redemption Price equal to 100% of the principal
amount.
6. Mandatory Redemption. No sinking fund is provided for the Series A
Convertible Debentures.
7. Conversion. Subject to the next two succeeding sentences, a Holder of a
Series A Convertible Debenture may convert it into Common Stock of the Company
at any time before the close of business on August 15, 2005; provided, however,
that if a Series A Convertible Debenture is called for redemption, the Holder
may convert it at any time before the close of business on the Redemption Date.
A Series A Convertible Debenture in respect of which a Holder is exercising such
Holder's option to require the Company to purchase such Series A Convertible
Debenture upon a Repurchase Event may be converted only if the notice of
exercise is withdrawn in accordance with the terms of the Indenture.
The initial conversion price is $54.00 per share of Common Stock, subject
to adjustment in certain events described in the Indenture. The Company will
deliver cash or a check in lieu of any fractional share of Common Stock.
To convert a Series A Convertible Debenture a Holder must (i) complete and
manually sign the conversion notice on the back of the Series A Convertible
Debenture or complete and manually sign a facsimile of such notice to the
Conversion Agent (or the office or agency referred to in Section 5.2 of the
First Supplemental Indenture) or, if applicable, complete and deliver to The
Depository Trust Company ("DTC" or the "Depositary," which term includes any
successor thereto) the appropriate instruction form for conversion pursuant to
the Depository's book-entry conversion program, (ii) surrender the Series A
Convertible Debenture to a Conversion Agent by physical or book-entry delivery
(which is not necessary in the case of conversion pursuant to the Depositary's
book-entry conversion program), (iii) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (iv) pay any transfer or similar
A-5
<PAGE>
tax, if required. Book-entry delivery of a Series A Convertible Debenture to the
Conversion Agent may be made by any financial institution that is a participant
in the Depositary; conversion through the Depositary's book-entry conversion
program is available for any Series A Convertible Debenture that is held in an
account maintained at the Depositary by any such participant.
A Holder may convert a portion of a Series A Convertible Debenture if the
portion is $1,000 or an integral multiple of $1,000. No payment or adjustment
will be made for dividends on the Common Stock, except as provided in the
Indenture.
The conversion price will be subject to adjustment upon the occurrence of
any of the following events: (i) the subdivision, combination or
reclassification of outstanding shares of Common Stock; (ii) the payment in
shares of Common Stock of a dividend or distribution on any class of capital
stock of the Company; (iii) the issuance of rights or warrants to all holders of
Common Stock entitling them to acquire shares of Common Stock at a price per
share less than the Current Market Price; (iv) the distribution to all holders
of Common Stock of shares of capital stock other than Common Stock, evidences of
indebtedness, cash and dividends, distributions, rights and warrants referred to
above); (v) a distribution consisting exclusively of cash (excluding any cash
distributions referred to in (iv) above) to all holders of Common Stock in an
aggregate amount that, together with (A) all other cash distributions (excluding
any cash distributions referred to in (iv) above) made within the 12 months
preceding such distribution and (B) any cash and the fair market value of other
consideration payable in respect of any tender offer by the Company or a
subsidiary of the Company for the Common Stock consummated within the 12 months
preceding such distribution, exceeds 15% of the Company's market capitalization
(determined as provided in the Indenture) on the date fixed for determining the
stockholders entitled to such distribution; and (vi) the consummation of a
tender offer made by the Company or any subsidiary of the Company for the Common
Stock which involves an aggregate consideration that, together with (X) any cash
and other consideration payable in respect of any respect of any tender offer by
the Company or a subsidiary of the Company for the Common Stock consummated with
the 12 months preceding the consummation of such tender offer and (Y) the
aggregate amount of all cash distributions (excluding any cash distributions
referred to in (iv) above) to all holders of the Common Stock within the 12
A-6
<PAGE>
months preceding the consummation of such tender offer, exceeds 15% of the
Company's market capital capitalization at the date of consummation of such
tender offer. No adjustment of the conversion price will be required to be made
until cumulative adjustments amount to at least one percent of the conversion
price, as last adjusted. Any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
If the Company is a party to a consolidation or merger of the type
specified in the Indenture, or certain transfers of all or substantially all of
its assets to another Person, or in certain other circumstances described in the
Indenture the right to convert a Series A Convertible Debenture into Common
Stock may be changed into a right to convert it into the kind and amount of
securities, cash or other assets that the Holder would have received if the
Holder had converted such Holder's Series A Convertible Debentures immediately
prior to such transaction.
8. Offers to Purchase. The Indenture provides upon the occurrence of a
Repurchase Event and subject to further limitations contained therein, the
Company shall make an offer to purchase the Series A Convertible Debentures in
accordance with the procedures set forth in the Indenture.
9. Denominations, Transfer, Exchange. The Series A Convertible Debentures
are in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Series A Convertible
Debentures in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay to it any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Series A Convertible
Debenture or portion of a Series A Convertible Debenture selected for
redemption, or transfer or exchange any Series A Convertible Debentures for a
period of 15 days before selection of such Series A Convertible Debentures to be
redeemed.
10. Persons Deemed Owners. The registered holder of a Series A Convertible
Debenture may be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company
A-7
<PAGE>
at its written request. After that, Holders entitled to the money must look to
the Company for payment as general creditors unless an "abandoned property" law
designates another Person.
12. Amendment, Supplement, Waiver. The Company and the Trustee may, without
the consent of the holders of any outstanding Series A Convertible Debentures,
amend, waive or supplement the Indenture or the Series A Convertible Debentures
for certain specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the qualification of the
Indenture under the Trust Indenture Act of 1939 or making any other change that
does not adversely affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Series A Convertible Debentures may be
made by the Company and the Trustee with the consent of the Holders of not less
than a majority of the aggregate principal amount of the outstanding Series A
Convertible Debentures, subject to certain exceptions requiring the consent of
the Holders of the particular Series A Convertible Debentures to be affected.
13. Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Series A Convertible Debentures and the
Indenture and the transaction complies with the terms of Article 5 of the
Indenture, the predecessor corporation, subject to certain exceptions, will be
released from those obligations.
14. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(d) or (e) of
the Indenture with respect to the Company) occurs and is continuing, then the
holders of not less than 25% in aggregate principal amount of the outstanding
Series A Convertible Debentures may, or the Trustee may, declare the principal
of, premium, if any, plus accrued interest, if any, to be due and payable
immediately. If an Event of Default specified in Section 6.1(d) or (e) of the
Indenture with respect to the Company occurs and is continuing, the principal
of, premium, if any, and accrued interest on all of the Series A Convertible
Debentures shall ipso facto become and be immediately due and payable subject to
the prior payment in full of Senior and Subordinated Debt without any
declaration or other act on the part of the Trustee or any Holder. Series A
Convertible Debentureholders may not enforce the Indenture or the Series A
Convertible Debentures except as provided in the Indenture. The Trustee may
require indemnity
A-8
<PAGE>
reasonably satisfactory to it before it enforces the Indenture or the Series A
Convertible Debentures. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Series A Convertible Debentures may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Series A Convertible Debentureholders notice of any continuing
default (except a default in payment of principal or interest or a failure to
comply with Article V of the Indenture) if it determines in good faith that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
15. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
16. No Recourse Against Others. A director, officer, employee, stockholder
or beneficiary, as such, of the Company shall not have any liability for any
obligations of the Company under the Series A Convertible Debentures or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Series A Convertible Debentureholder by
accepting a Series A Convertible Debenture waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Series A Convertible Debentures.
17. Defeasance. The Indenture contains provisions (which provisions apply
to this Series A Convertible Debenture) for defeasance at any time of (a) the
entire indebtedness of the Company in respect of this Series A Convertible
Debenture and (b) certain restrictive covenants and related Defaults and Events
of Default, in each case upon compliance by the Company with certain conditions
set forth therein.
18. Authentication. This Series A Convertible Debenture shall not be valid
until the Trustee signs the certificate of authentication on the other side of
this Series A Convertible Debenture.
19. Abbreviations. Customary abbreviations may be used in the name of a
Series A Convertible Debentureholder or an assignee, such as: TEN COM (= tenants
in common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with
right
A-9
<PAGE>
of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
20. Subordination. The Company's payment of principal of, premium, if any,
and interest on the Series A Convertible Debentures is subordinated in right of
payment, to the extent and in the manner provided in Article 11 of the
Indenture, to the prior payment in full of the Senior and Subordinated Debt of
the Company. Each Holder of the Series A Convertible Debentures, by his
acceptance hereof, covenants and agrees that all payments of the principal of,
premium, if any, and interest on the Series A Convertible Debentures by the
Company shall be subordinated in accordance with the provisions of Article 11 of
the Indenture, and each Holder accepts and agrees to be bound by such
provisions.
21. GOVERNING LAW. THE INDENTURE AND THIS SERIES A CONVERTIBLE DEBENTURE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Series A Convertible Debentureholder upon
written request and without charge a copy of the Indenture. Requests may be made
to:
THE AES CORPORATION
1001 North 19th Street, Suite 2000
Arlington, Virginia 22209
Telephone: (703) 522-1315
Telecopy: (703) 528-4510
Attention: General Counsel
A-10
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Series A Convertible Debenture, fill in
the form below and have your signature guaranteed:
I or we assign and transfer this Series A Convertible
Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)____________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
agent to transfer this Series A Convertible Debenture on the books of the
Company. The agent may substitute another to act for him.
Date: Your signature:
---------------------- -----------------------------
(Sign exactly as your name
appears on the other side of
this Series A Convertible
Debenture)
Signature Guarantee:____________________________________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Series A Convertible Debenture purchased by the
Company upon the occurrence of a Repurchase Event, check the Box: [ ]
If you wish to have a portion of this Series A Convertible Debenture
purchased by the Company upon the occurrence of a Repurchase Event, state the
amount: $
Date:__________ Your Signature:__________________
(Sign exactly as your name appears on the other side of this Series A
Convertible Debenture)
Signature Guarantee:_______________________
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
<PAGE>
CONVERSION NOTICE
The undersigned owner of this Series A Convertible Debenture hereby
irrevocably exercises the option to convert this Series A Convertible Debenture,
or the portion below designated, into Common Stock of THE AES CORPORATION, in
accordance with the terms of the Indenture referred to in this Series A
Convertible Debenture, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Date: __________, ____
in whole Portions of Series A Convertible Debenture to be
converted ($1,000 or integral multiples thereof):
$
-------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Signature Guarantee:*____________________________
- ----------
* Signature must be guaranteed by an "eligible Guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Conversion Agent, which requirements include
membership of participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Conversion Agent in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
EXHIBIT 4.17
The company has numerous other instruments governing long-term indebtedness
that are not registered, none of which exceeds ten percent of the total assets
of the Registrant and its subsidiaries on a consolidated basis, and the Company
hereby agrees to furnish a copy of any of such agreements to the Commission upon
request.
THE AES CORPORATION EXHIBIT 11
STATEMENTS REGARDING COMPUTATION OF EARNINGS PER SHARE
FOR THE PERIODS ENDED JUNE 30, 1997 AND 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
6/30/97 6/30/98 6/30/97 6/30/98
- ------------------------------------------------------------------------------------------------------------------------
($ in millions, except per share amounts)
<S> <C> <C> <C> <C>
BASIC
WEIGHTED AVERAGE SHARES
OUTSTANDING 163.4 175.6 159.5 175.4
------- ------- ------- -------
NET INCOME $ 42 $ 71 $ 82 $ 136
======= ======= ======= =======
PER SHARE AMOUNT $ 0.26 $ 0.41 $ 0.51 $ 0.77
======= ======= ======= =======
DILUTED
Weighted Average Number of Shares
of Common Stock Outstanding 163.4 175.6 159.5 175.4
Net effect of Dilutive Stock Options and
Warrants Based on the Treasury Stock
Method Using Ending Market Price 4.3 4.7 4.2 4.6
Stock Units Allocated to the Deferred
Compensation Plans for
Executives and Directors 0.3 0.3 0.3 0.3
Effect of Tecons - Based on
the If-Converted Method 0.0 6.9 0.0 6.9
------- ------- ------- -------
WEIGHTED AVERAGE SHARES
OUTSTANDING 168.0 187.5 164.0 187.2
======= ======= ======= =======
NET INCOME $ 42 $ 71 $ 82 $ 136
Additional Contribution to Net Income if
Tecons is fully converted 0 3 0 5
------- ------- ------- -------
ADJUSTED NET INCOME $ 42 $ 74 $ 82 $ 141
======= ======= ======= =======
PER SHARE AMOUNT $ 0.25 $ 0.39 $ 0.50 $ 0.75
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 367
<SECURITIES> 80
<RECEIVABLES> 432
<ALLOWANCES> (52)
<INVENTORY> 121
<CURRENT-ASSETS> 1174
<PP&E> 6007
<DEPRECIATION> (445)
<TOTAL-ASSETS> 10464
<CURRENT-LIABILITIES> 1436
<BONDS> 5854
550
0
<COMMON> 2
<OTHER-SE> 1530
<TOTAL-LIABILITY-AND-EQUITY> 10464
<SALES> 1132
<TOTAL-REVENUES> 1140
<CGS> 782
<TOTAL-COSTS> 824
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 15
<INTEREST-EXPENSE> 202
<INCOME-PRETAX> 245
<INCOME-TAX> 69
<INCOME-CONTINUING> 136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 136
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.75
</TABLE>
